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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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NEW YORK
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13-1432060
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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521 WEST 57TH STREET, NEW YORK, N.Y.
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10019
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value
|
New York Stock Exchange
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12
1
/
2
¢ per share
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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PAGE
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 1.
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BUSINESS.
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Region
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% of 2015 Sales
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|
Europe, Africa, Middle East
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31
|
%
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Greater Asia
|
28
|
%
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North America
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24
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%
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Latin America
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17
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%
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(1)
|
Innovating Firsts
- We seek to strengthen our position and drive differentiation in priority R&D platforms. We are sharply focused on key initiatives that are grounded in consumer needs, such as modulation, proteins and textures for flavors, new molecules and digital scents for fragrances, and delivery systems and naturals across both business units.
In 2015, we launched four captive molecules to be used exclusively by our perfumers, and commercialized two new natural taste modulators.
|
(2)
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Win Where We Compete
- Our goal is to achieve a #1 or #2 market leadership position in key markets and categories and with specific customers. For example, we believe that there is opportunity to further improve our market share position in North America, where innovation-centric customers are expected to continue to drive one of the world’s largest flavor and fragrance markets. In the Middle East and Africa, which are among the fastest-growing regions globally, many of our international and domestic customers are strategizing to penetrate these key markets and we believe that we can leverage our existing relationships with them to increase our participation in these markets. In addition, we are targeting specific end-use categories, such as Home Care and Fine Fragrances, and customers, where innovation and creativity will fuel growth.
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(3)
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Become Our Customers' Partner of Choice
-
Our goal is to attain commercial excellence by providing our customers with in-depth local consumer understanding, industry-leading innovation, outstanding service and the highest quality products. In 2015, we won the North America innovation award with one of our largest flavor customers, which recognizes partners for their thought leadership. In addition, one of our global fragrance customers presented us with their Supplier Excellence award, an achievement designed to acknowledge their top performing business partners. We believe the addition of Lucas Meyer to our Fragrances business enhances our capabilities and product offerings needed to be a partner of choice. We
believe that becoming our customers’ partner of choice will lead to incremental business opportunities for our customers and us.
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(4)
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Strengthen and Expand the Portfolio
- We actively pursue value-creation through partnerships, collaborations, and acquisitions within flavors, fragrances and adjacencies. We prioritize opportunities that provide (i) access to new technologies, (ii) the ability to increase our market share in key markets and with key customers or (iii) access to
|
◦
|
Fine Fragrances
-
Fine Fragrances focuses on perfumes and colognes. IFF’s scientists and perfumers collaborate to develop new molecules, new natural extractions, and innovative processes that enliven perfumers' palettes and help them create unique, inspiring fragrances. We have created some of the industry-leading fine fragrance classics as well as cutting-edge niche fragrances, as evidenced by the number of top sellers and the successes of our new launches.
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◦
|
Consumer Fragrances
- Our Consumer Fragrances include five end-use categories of products:
|
▪
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Fabric Care - laundry detergents, fabric softeners and specialty laundry products;
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▪
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Home Care - household cleaners, dishwashing detergents and air fresheners;
|
▪
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Personal Wash, including bar soap and shower gel;
|
▪
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Hair Care; and
|
▪
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Toiletries.
|
◦
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discovery of new materials;
|
◦
|
development of new technologies, such as delivery systems;
|
◦
|
creation of new compounds; and
|
◦
|
enhancement of existing ingredients and compounds.
|
Andreas Fibig
|
54
|
Chairman of the Board and Chief Executive Officer
|
Alison A. Cornell
|
53
|
Executive Vice President and Chief Financial Officer
|
Nicolas Mirzayantz
|
53
|
Group President, Fragrances
|
Matthias Haeni
|
50
|
Group President, Flavors
|
Ahmet Baydar
|
63
|
Executive Vice President, Research and Development
|
Angelica T. Cantlon
|
64
|
Executive Vice President, Chief Human Resources Officer
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Anne Chwat
|
56
|
Executive Vice President, General Counsel and Corporate Secretary
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Francisco Fortanet
|
47
|
Executive Vice President, Operations
|
ITEM 1A.
|
RISK FACTORS.
|
•
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diversion of management attention from managing our historical core business;
|
•
|
potential disruption of our historical core business of the acquired business;
|
•
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the strain on, and need to continue to expand, our existing operational, technical, financial and administrative infrastructure;
|
•
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the challenges related to the lack of experience in operating in the geographical or product markets of the acquired business;
|
•
|
challenges in controlling additional costs and expenses in connection with and as a result of the acquisition;
|
•
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the difficulties in assimilating employees and corporate cultures or in integrating systems and controls;
|
•
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difficulties in anticipating and responding to actions that may be taken by competitors in response to the acquisitions;
|
•
|
potential loss of key employees, customers, suppliers or other partners of the acquired business; and
|
•
|
the assumption of and exposure to unknown or contingent liabilities of acquired businesses.
|
•
|
governmental laws, regulations and policies adopted to manage national economic conditions, such as increases in taxes, austerity measures that may impact consumer spending, monetary policies that may impact inflation rates, currency fluctuations and sustainability of resources;
|
•
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changes in environmental, health and safety regulations, such as the continued implementation of the European Union’s REACH regulations, and the burdens and costs of our compliance with such regulations;
|
•
|
the imposition of tariffs, quotas, trade barriers, other trade protection measures and import or export licensing requirements, which could adversely affect our cost or ability to import raw materials or export our flavors or fragrances to surrounding markets;
|
•
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risks and costs arising from language and cultural differences;
|
•
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changes in the laws and policies that govern foreign investment in the countries in which we operate, including the risk of expropriation or nationalization, and the costs and ability to repatriate the profit that we generate in these countries;
|
•
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risks and costs associated with political and economic instability, bribery and corruption, and social and ethnic unrest in the countries in which we operate;
|
•
|
difficulty in recruiting and retaining trained local personnel;
|
•
|
national and regional labor strikes in the countries in which we operate; or
|
•
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the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights.
|
•
|
the risk that we may be unable to integrate successfully the relocated manufacturing operations;
|
•
|
the risk that we may be unable to effectively reduce overhead, coordinate management and integrate and retain employees of the relocated manufacturing operations;
|
•
|
the risk that we may face difficulties in implementing and maintaining consistent standards, controls, procedures, policies and information systems;
|
•
|
potential strains on our personnel, systems and resources and diversion of attention from other priorities; and
|
•
|
unforeseen or contingent liabilities of the relocated manufacturing operations.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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Location
|
Operation
|
United States
|
|
Carrollton, TX
(1)
|
Production of flavor compounds; flavor laboratories.
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Hazlet, NJ(1)
|
Production of fragrance compounds; fragrance laboratories.
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Jacksonville, FL
|
Production of fragrance ingredients.
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New York, NY(1)
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Fragrance laboratories; corporate headquarters.
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South Brunswick, NJ(1)
|
Production of flavor compounds and ingredients; flavor laboratories.
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Union Beach, NJ
|
Research and development center.
|
|
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France
|
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Neuilly
(1)
|
Fragrance laboratories.
|
Grasse
|
Production of flavor and fragrance ingredients; fragrance laboratories.
|
|
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Great Britain
|
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Haverhill
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Production of flavor compounds and ingredients, and fragrance ingredients; flavor laboratories.
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|
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Netherlands
|
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Hilversum
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Flavor and fragrance laboratories.
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Tilburg
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Production of flavor compounds and ingredients, and fragrance compounds.
|
|
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Spain
|
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Benicarló
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Production of fragrance ingredients.
|
|
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Argentina
|
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Garin
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Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories.
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|
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Brazil
|
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Rio de Janeiro
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Production of fragrance compounds.
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São Paulo
|
Flavor and fragrance laboratories.
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Taubate
|
Production of flavor compounds and ingredients.
|
|
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Mexico
|
|
Tlalnepantla
|
Production of flavor and fragrance compounds; flavor and fragrance laboratories.
|
|
|
India
|
|
Mumbai
(2)
|
Flavor and fragrance laboratories.
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Chennai
(2)
|
Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories.
|
|
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Australia
|
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Dandenong
|
Production of flavor compounds and flavor ingredients.
|
|
|
China
|
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Guangzhou
(3)
|
Production of flavor compounds.
|
Guangzhou
(3)
|
Production of fragrance compounds.
|
Shanghai
(4)
|
Flavor and fragrance laboratories.
|
Xin’anjiang
(5)
|
Production of fragrance ingredients.
|
Zhejiang
(3)
|
Production of fragrance ingredients.
|
Location
|
Operation
|
Indonesia
|
|
Jakarta
|
Production of flavor compounds and ingredients; flavor and fragrance laboratories.
|
|
|
Japan
|
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Gotemba
|
Production of flavor compounds.
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Tokyo
|
Flavor and fragrance laboratories.
|
|
|
Singapore
|
|
Jurong
(4)
|
Production of flavor and fragrance compounds.
|
Science Park
(1)
|
Flavor and fragrance laboratories.
|
|
|
Turkey
|
|
Gebze
|
Production of flavor compounds.
|
|
|
Israel
|
|
Kibbutz Givat-Oz
(3)
|
Flavor and fragrance ingredients manufacturing and laboratories.
|
(1)
|
Leased.
|
(2)
|
We have a 93.4% interest in the subsidiary company that owns this facility.
|
(3)
|
Land is leased and building and machinery and equipment are owned.
|
(4)
|
Building is leased and machinery and equipment are owned.
|
(5)
|
We have a 90% interest in the subsidiary company that leases the land and owns the buildings and machinery.
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
|
2015
|
|
2014
|
||||||||||||
Quarter
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First
|
$
|
123.08
|
|
|
$
|
97.59
|
|
|
$
|
97.91
|
|
|
$
|
82.91
|
|
Second
|
120.61
|
|
|
108.82
|
|
|
105.61
|
|
|
91.31
|
|
||||
Third
|
118.87
|
|
|
100.02
|
|
|
105.84
|
|
|
95.51
|
|
||||
Fourth
|
122.64
|
|
|
106.91
|
|
|
104.00
|
|
|
91.64
|
|
Title of Class
|
Number of shareholders of record as of February 15, 2016
|
Common stock, par value 12
1
/
2
¢ per share
|
2,012
|
Quarter
|
2015
|
|
2014
|
||||
First
|
$
|
0.47
|
|
|
$
|
0.39
|
|
Second
|
0.47
|
|
|
0.39
|
|
||
Third
|
0.56
|
|
|
0.47
|
|
||
Fourth
|
0.56
|
|
|
0.47
|
|
|
ANNUAL RETURN PERCENTAGE
Years Ending
|
|||||||||||||
Company Name / Index
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|||||
International Flavors & Fragrances
|
(3.81
|
)
|
|
29.72
|
|
|
31.59
|
|
|
19.95
|
|
|
20.22
|
|
S&P 500 Index
|
2.11
|
|
|
16.00
|
|
|
32.39
|
|
|
13.69
|
|
|
1.38
|
|
Peer Group
|
9.69
|
|
|
8.21
|
|
|
19.83
|
|
|
7.98
|
|
|
5.54
|
|
|
INDEXED RETURNS
Years Ending
|
||||||||||||||||||||||
Company Name / Index
|
Base Period 2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
||||||||||||
International Flavors &
Fragrances
|
$
|
100
|
|
|
$
|
96.19
|
|
|
$
|
124.78
|
|
|
$
|
164.20
|
|
|
$
|
196.95
|
|
|
$
|
236.78
|
|
S&P 500 Index
|
100
|
|
|
102.11
|
|
|
118.45
|
|
|
156.82
|
|
|
178.29
|
|
|
180.75
|
|
||||||
Peer Group
|
100
|
|
|
109.69
|
|
|
118.69
|
|
|
142.23
|
|
|
153.58
|
|
|
162.09
|
|
Peer Group Companies
(2)
|
|
|
Alberto Culver Company (included through 5/9/11)
|
Hillshire Brands Co. (included through 8/28/14)
|
YUM! Brands Inc.
|
Avon Products Inc.
|
Hormel Foods Corp.
|
|
Campbell Soup Co.
|
Kellogg Co.
|
|
Church & Dwight Co. Inc.
|
Estee Lauder Companies, Inc.
|
|
Clorox Company
|
McCormick & Company, Inc.
|
|
Coca-Cola Company
|
McDonald’s Corp.
|
|
Colgate-Palmolive Co.
|
Nestle SA
|
|
ConAgra Foods, Inc.
|
Pepsico Inc.
|
|
Edgewell Personal Care (included since 7/1/15)
|
Procter & Gamble Co.
|
|
General Mills Inc.
|
Revlon Inc.
|
|
Heinz (HJ) Co. (included through 6/7/13)
|
Sensient Technologies Corp.
|
|
Hershey Company
|
Unilever NV
|
|
(1)
|
The Cumulative Shareholder Return assumes that the value of an investment in our Common Stock and each index was $100 on December 31, 2010, and that all dividends were reinvested.
|
(2)
|
Due to the international scope and breadth of our business, we believe that a Peer Group comprising international public companies, which are representative of the customer group to which we sell our products, is the most appropriate group against which to compare shareholder returns. Alberto Culver Company ceased trading on May 9, 2011 and has only been included through that date. In July 2012, Sara Lee Corp. spun off certain of its businesses and changed its name to Hillshire Brands Co. Heinz (HJ) Co was acquired by Hawk Acquisition Holding Corp on June 7, 2013 and has only been included through that date. Hillshire Brands Co was acquired by Tyson Foods on August 28, 2014 and has only been
|
Period
|
Total Number of
Shares
Repurchased
(1)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
|
|
Approximate Dollar Value
of Shares That May Yet
be Purchased Under the
Program
|
||||||
October 1 - 31, 2015
|
137,589
|
|
|
$
|
110.48
|
|
|
137,589
|
|
|
$
|
262,496,041
|
|
November 1 - 30, 2015
|
121,600
|
|
|
115.11
|
|
|
121,600
|
|
|
248,498,869
|
|
||
December 1 - 31, 2015
|
98,721
|
|
|
119.10
|
|
|
98,721
|
|
|
236,740,882
|
|
||
Total
|
357,910
|
|
|
$
|
114.90
|
|
|
357,910
|
|
|
$
|
236,740,882
|
|
(1)
|
Shares were repurchased pursuant to the repurchase program originally announced in December 2012, with repurchases beginning in the first quarter of 2013. In August 2015, the Board of Directors amended the program, authorizing an additional $250 million and extending the program through December 31, 2017. Repurchases under the amended program are limited to $500 million in total repurchase price, and the expiration date is December 31, 2017. Authorization of the repurchase program may be modified, suspended, or discontinued at any time.
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
|
|
Net Income Per Share
|
|||||||||||||||||||||||||||||||||||||
|
Net Sales
|
|
Gross Profit
(a)
|
|
Net Income
(b)
|
|
Basic
|
|
Diluted
(c)(e)
|
||||||||||||||||||||||||||||||
Quarter
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||||||
First
|
$
|
774,907
|
|
|
$
|
770,224
|
|
|
$
|
346,277
|
|
|
$
|
341,412
|
|
|
$
|
128,258
|
|
|
$
|
106,707
|
|
|
$
|
1.58
|
|
|
$
|
1.31
|
|
|
$
|
1.57
|
|
|
$
|
1.30
|
|
Second
|
767,541
|
|
|
788,414
|
|
|
345,040
|
|
|
352,647
|
|
|
105,374
|
|
|
110,285
|
|
|
1.30
|
|
|
1.35
|
|
|
1.29
|
|
|
1.35
|
|
||||||||||
Third
|
765,092
|
|
|
773,813
|
|
|
347,126
|
|
|
340,111
|
|
|
106,447
|
|
|
107,415
|
|
|
1.32
|
|
|
1.32
|
|
|
1.31
|
|
|
1.31
|
|
||||||||||
Fourth
(d)
|
715,649
|
|
|
756,082
|
|
|
313,156
|
|
|
327,980
|
|
|
79,168
|
|
|
90,136
|
|
|
0.99
|
|
|
1.11
|
|
|
0.98
|
|
|
1.10
|
|
||||||||||
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
1,351,599
|
|
|
$
|
1,362,150
|
|
|
$
|
419,247
|
|
|
$
|
414,543
|
|
|
$
|
5.19
|
|
|
$
|
5.09
|
|
|
$
|
5.16
|
|
|
$
|
5.06
|
|
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Description
|
||||||
Q1 2015
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
$
|
281
|
|
|
$
|
211
|
|
|
$
|
—
|
|
|
Related to accelerated depreciation associated with a plant closing in Asia.
|
Restructuring and other charges
|
|
—
|
|
|
121
|
|
|
—
|
|
|
Restructuring costs associated with the Fragrance Ingredients Rationalization.
|
|||
Acquisition related costs and adjustments
|
|
—
|
|
|
325
|
|
|
—
|
|
|
Transaction costs related to the acquisition of Ottens Flavors.
|
|||
Tax settlements
|
|
—
|
|
|
(10,478
|
)
|
|
(0.13
|
)
|
|
Settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes.
|
|||
Q2 2015
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
281
|
|
|
211
|
|
|
—
|
|
|
Related to accelerated depreciation associated with a plant closing in Asia.
|
|||
Restructuring and other charges
|
|
—
|
|
|
(233
|
)
|
|
—
|
|
|
Restructuring costs associated with the Fragrance Ingredients Rationalization.
|
|||
Acquisition related costs and adjustments
|
|
844
|
|
|
5,691
|
|
|
0.07
|
|
|
Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisition.
|
|||
Q3 2015
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
279
|
|
|
209
|
|
|
—
|
|
|
Related to accelerated depreciation associated with a plant closing in Asia.
|
|||
Acquisition related costs and adjustments
|
|
2,465
|
|
|
6,001
|
|
|
0.07
|
|
|
Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Lucas Meyer acquisition.
|
|||
Q4 2015
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
274
|
|
|
205
|
|
|
—
|
|
|
Related to accelerated depreciation associated with a plant closing in Asia.
|
|||
Restructuring and other charges
|
|
—
|
|
|
5,402
|
|
|
0.07
|
|
|
Severance costs associated with various restructuring activities.
|
|||
Acquisition related costs and adjustments
|
|
3,515
|
|
|
99
|
|
|
—
|
|
|
Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Lucas Meyer acquisition.
|
|||
Accelerated Contingent Consideration
|
|
—
|
|
|
7,192
|
|
|
0.09
|
|
|
Represents the acceleration of the contingent consideration payment related to the Aromor acquisition.
|
|||
Reversal of Spanish capital tax charge
|
|
—
|
|
|
(7,582
|
)
|
|
(0.09
|
)
|
|
To reverse the previously recorded provision related to the Spanish capital tax case as a result of the favorable ruling received on February 24, 2016.
|
|||
Q1 2014
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
369
|
|
|
279
|
|
|
—
|
|
|
Associated with plant closings and other organizational realignments in Europe and Asia.
|
|||
Restructuring and other charges
|
|
2,250
|
|
|
1,541
|
|
|
0.02
|
|
|
Accelerated depreciation associated with the Fragrance Ingredients Rationalization.
|
|||
Q2 2014
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
263
|
|
|
196
|
|
|
—
|
|
|
Associated with plant closings and other organizational realignments in Europe and Asia.
|
|||
Restructuring and other charges
|
|
2,850
|
|
|
1,972
|
|
|
0.02
|
|
|
Accelerated depreciation associated with the Fragrance Ingredients Rationalization.
|
|||
Q3 2014
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
282
|
|
|
212
|
|
|
—
|
|
|
Associated with plant closings and other organizational realignments in Europe and Asia.
|
|||
Restructuring and other charges
|
|
|
|
|
395
|
|
|
0.01
|
|
|
Restructuring costs associated with the Fragrance Ingredients Rationalization.
|
|||
Q4 2014
|
|
|
|
|
|
|
|
|
||||||
Operational improvement initiatives
|
|
1,628
|
|
|
1,218
|
|
|
0.01
|
|
|
Associated with plant closings and other organizational realignments in Europe and Asia.
|
|||
Restructuring and other charges
|
|
|
|
|
251
|
|
|
—
|
|
|
Restructuring costs associated with the Fragrance Ingredients Rationalization.
|
|||
Gain on Sale of Asset
|
|
—
|
|
|
(470
|
)
|
|
—
|
|
|
Net gain related to the sale of a non-operating asset.
|
|||
Spanish Tax
|
|
—
|
|
|
(3,825
|
)
|
|
(0.05
|
)
|
|
Associated with the favorable ruling of the 2011 Spanish dividend withholding case.
|
(d)
|
Q4-2014 includes the impact of an extra week in 2014 (as discussed in Note 1 of the Consolidated Financial Statements). This impact was not material to our results of operations for the year ended December 31, 2014.
|
(e)
|
The sum of the 2015 Net Income per diluted share by quarter does not equal the earnings per share for the full year due to rounding.
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Consolidated Statement of Income Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
Cost of goods sold
(a)
|
1,671,590
|
|
|
1,726,383
|
|
|
1,668,691
|
|
|
1,645,912
|
|
|
1,683,362
|
|
|||||
Gross profit
|
1,351,599
|
|
|
1,362,150
|
|
|
1,284,205
|
|
|
1,175,534
|
|
|
1,104,656
|
|
|||||
Research and development expenses
|
246,101
|
|
|
253,640
|
|
|
259,838
|
|
|
233,713
|
|
|
219,781
|
|
|||||
Selling and administrative expenses
(b)
|
509,557
|
|
|
514,891
|
|
|
505,877
|
|
|
453,535
|
|
|
443,974
|
|
|||||
Restructuring and other charges, net
(c)
|
7,594
|
|
|
1,298
|
|
|
2,151
|
|
|
1,668
|
|
|
13,172
|
|
|||||
Operating profit
|
588,347
|
|
|
592,321
|
|
|
516,339
|
|
|
486,618
|
|
|
427,729
|
|
|||||
Interest expense
|
46,062
|
|
|
46,067
|
|
|
46,767
|
|
|
41,753
|
|
|
44,639
|
|
|||||
Other (income) expense, net
(d)
|
3,184
|
|
|
(2,807
|
)
|
|
(15,638
|
)
|
|
1,450
|
|
|
9,544
|
|
|||||
Income before taxes
|
539,101
|
|
|
549,061
|
|
|
485,210
|
|
|
443,415
|
|
|
373,546
|
|
|||||
Taxes on income
(e)
|
119,854
|
|
|
134,518
|
|
|
131,666
|
|
|
189,281
|
|
|
106,680
|
|
|||||
Net income
|
$
|
419,247
|
|
|
$
|
414,543
|
|
|
$
|
353,544
|
|
|
$
|
254,134
|
|
|
$
|
266,866
|
|
Percentage of net sales
|
13.9
|
|
|
13.4
|
|
|
12.0
|
|
|
9.0
|
|
|
9.6
|
|
|||||
Percentage of average shareholders’ equity
|
26.9
|
|
|
27.7
|
|
|
26.0
|
|
|
21.5
|
|
|
25.3
|
|
|||||
Net income per share — basic
|
$
|
5.19
|
|
|
$
|
5.09
|
|
|
$
|
4.32
|
|
|
$
|
3.11
|
|
|
$
|
3.30
|
|
Net income per share — diluted
|
$
|
5.16
|
|
|
$
|
5.06
|
|
|
$
|
4.29
|
|
|
$
|
3.09
|
|
|
$
|
3.26
|
|
Average number of diluted shares (thousands)
|
80,891
|
|
|
81,494
|
|
|
81,930
|
|
|
81,833
|
|
|
81,467
|
|
|||||
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
181,988
|
|
|
$
|
478,573
|
|
|
$
|
405,505
|
|
|
$
|
324,422
|
|
|
$
|
88,279
|
|
Receivables, net
|
537,896
|
|
|
493,768
|
|
|
524,493
|
|
|
499,443
|
|
|
472,346
|
|
|||||
Inventories
|
589,019
|
|
|
568,729
|
|
|
533,806
|
|
|
540,658
|
|
|
544,439
|
|
|||||
Property, plant and equipment, net
|
732,794
|
|
|
720,268
|
|
|
687,215
|
|
|
654,641
|
|
|
608,065
|
|
|||||
Goodwill and intangible assets, net
|
1,247,393
|
|
|
752,041
|
|
|
696,197
|
|
|
702,270
|
|
|
708,345
|
|
|||||
Total assets
|
3,721,454
|
|
|
3,494,621
|
|
|
3,331,731
|
|
|
3,246,192
|
|
|
2,965,581
|
|
|||||
Bank borrowings, overdrafts and current portion of long-term debt
|
132,349
|
|
|
8,090
|
|
|
149
|
|
|
150,071
|
|
|
116,688
|
|
|||||
Long-term debt
|
937,844
|
|
|
934,232
|
|
|
932,665
|
|
|
881,104
|
|
|
778,248
|
|
|||||
Total Shareholders’ equity
(f)
|
1,594,990
|
|
|
1,522,689
|
|
|
1,467,051
|
|
|
1,252,555
|
|
|
1,107,407
|
|
|||||
Other Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Current ratio
(g)
|
2.0
|
|
|
3.3
|
|
|
2.9
|
|
|
2.5
|
|
|
2.3
|
|
|||||
Additions to property, plant and equipment
|
$
|
101,030
|
|
|
$
|
143,182
|
|
|
$
|
134,157
|
|
|
$
|
126,140
|
|
|
$
|
127,457
|
|
Depreciation and amortization expense
|
89,597
|
|
|
89,354
|
|
|
83,227
|
|
|
76,667
|
|
|
75,327
|
|
|||||
Cash dividends declared per share
|
$
|
2.06
|
|
|
$
|
1.72
|
|
|
$
|
1.46
|
|
|
$
|
1.30
|
|
|
$
|
1.16
|
|
Number of shareholders of record at year-end
|
2,013
|
|
|
2,105
|
|
|
2,255
|
|
|
2,430
|
|
|
2,587
|
|
|||||
Number of employees at year-end
|
6,732
|
|
|
6,211
|
|
|
6,000
|
|
|
5,715
|
|
|
5,644
|
|
(a)
|
The 2015 amount includes
$6,825
($4,516 after tax) of costs related to the fair value step-up of inventory for the Ottens Flavors and Lucas Meyer acquisitions and
$1,115
(
$836
after tax) of operational improvement initiative costs in Europe and Asia. The 2014 amount includes $7,641 ($5,221 after tax) of accelerated depreciation associated with the Fragrance Ingredients rationalization and operational improvement initiative costs in Europe and Asia. The 2013 amount includes
|
(b)
|
The 2015 amount includes $10,530 (
$7,582
after tax) of reversal of the previously recorded provision for the Spanish capital tax case,
$7,192
of expense for the acceleration of the contingent consideration payments related to the Aromor acquisition. The 2013 amount includes $13,011 ($9,108 after tax) of expense associated with the Spanish capital tax case and $33,495 ($29,846 after tax) in 2011 of costs associated with the Mane patent litigation settlement.
|
(c)
|
Restructuring and other charges
$5,292
after tax in 2015, $844 after tax in 2014, $1,398 after tax in 2013, $1,047 after tax in 2012, and $9,444 after tax in 2011 were the result of various restructuring and reorganization programs of the Company.
|
(d)
|
The 2014 amount includes $723 ($470 after tax) and the 2013 amount includes $14,155 ($8,522 after tax) of net gains related to the sale of non-operating assets.
|
(e)
|
The 2015 amount includes
$10,478
of settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. The 2012 amount includes after tax charges of $72,362 related to the overall Spanish tax settlement.
|
(f)
|
Includes noncontrolling interest for all periods presented.
|
(g)
|
Current ratio is equal to current assets divided by current liabilities.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
Sales by Destination
(DOLLARS IN MILLIONS)
|
2015
|
|
Percent
of sales
|
|
2014
|
|
Percent
of sales
|
|
2013
|
|
Percent
of sales
|
|||||||||
Europe, Africa and Middle East (EAME)
|
$
|
946
|
|
|
31
|
%
|
|
$
|
1,042
|
|
|
34
|
%
|
|
$
|
972
|
|
|
33
|
%
|
Greater Asia (GA)
|
839
|
|
|
28
|
%
|
|
856
|
|
|
28
|
%
|
|
823
|
|
|
28
|
%
|
|||
North America (NOAM)
|
718
|
|
|
24
|
%
|
|
690
|
|
|
22
|
%
|
|
681
|
|
|
23
|
%
|
|||
Latin America (LA)
|
520
|
|
|
17
|
%
|
|
501
|
|
|
16
|
%
|
|
477
|
|
|
16
|
%
|
|||
Total net sales, as reported
|
$
|
3,023
|
|
|
|
|
$
|
3,089
|
|
|
|
|
$
|
2,953
|
|
|
|
|
Year Ended December 31,
|
|||||||
Sales by End-Use Product Category
|
2015
|
|
2014
|
|
2013
|
|||
Flavor Compounds
|
48
|
%
|
|
47
|
%
|
|
48
|
%
|
Consumer Fragrances
|
32
|
%
|
|
32
|
%
|
|
32
|
%
|
Fine Fragrances
|
10
|
%
|
|
11
|
%
|
|
11
|
%
|
Fragrance Ingredients
|
10
|
%
|
|
10
|
%
|
|
9
|
%
|
Total Net Sales
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2015
|
|
2014
|
|
2013
|
|
2015 vs. 2014
|
|
2014 vs. 2013
|
||||||||
Net sales
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
(2.1
|
)%
|
|
4.6
|
%
|
Cost of goods sold
|
1,671,590
|
|
|
1,726,383
|
|
|
1,668,691
|
|
|
(3.2
|
)%
|
|
3.5
|
%
|
|||
Gross profit
|
1,351,599
|
|
|
1,362,150
|
|
|
1,284,205
|
|
|
|
|
|
|||||
Research and development (R&D) expenses
|
246,101
|
|
|
253,640
|
|
|
259,838
|
|
|
(3.0
|
)%
|
|
(2.4
|
)%
|
|||
Selling and administrative (S&A) expenses
|
509,557
|
|
|
514,891
|
|
|
505,877
|
|
|
(1.0
|
)%
|
|
1.8
|
%
|
|||
Restructuring and other charges, net
|
7,594
|
|
|
1,298
|
|
|
2,151
|
|
|
485.1
|
%
|
|
(39.7
|
)%
|
|||
Operating profit
|
588,347
|
|
|
592,321
|
|
|
516,339
|
|
|
|
|
|
|||||
Interest expense
|
46,062
|
|
|
46,067
|
|
|
46,767
|
|
|
—
|
%
|
|
(1.5
|
)%
|
|||
Other expense (income), net
|
3,184
|
|
|
(2,807
|
)
|
|
(15,638
|
)
|
|
(213.4
|
)%
|
|
(82.1
|
)%
|
|||
Income before taxes
|
539,101
|
|
|
549,061
|
|
|
485,210
|
|
|
|
|
|
|||||
Taxes on income
|
119,854
|
|
|
134,518
|
|
|
131,666
|
|
|
(10.9
|
)%
|
|
2.2
|
%
|
|||
Net income
|
$
|
419,247
|
|
|
$
|
414,543
|
|
|
$
|
353,544
|
|
|
|
|
|
||
Net income per share — diluted
|
$
|
5.16
|
|
|
$
|
5.06
|
|
|
$
|
4.29
|
|
|
2.0
|
%
|
|
17.9
|
%
|
Gross margin
|
44.7
|
%
|
|
44.1
|
%
|
|
43.5
|
%
|
|
60.0
|
|
|
60.0
|
|
|||
R&D as a percentage of sales
|
8.1
|
%
|
|
8.2
|
%
|
|
8.8
|
%
|
|
(10.0
|
)
|
|
(60.0
|
)
|
|||
S&A as a percentage of sales
|
16.9
|
%
|
|
16.7
|
%
|
|
17.1
|
%
|
|
20.0
|
|
|
(40.0
|
)
|
|||
Operating margin
|
19.5
|
%
|
|
19.2
|
%
|
|
17.5
|
%
|
|
30.0
|
|
|
170.0
|
|
|||
Adjusted operating margin
(1)
|
20.2
|
%
|
|
19.5
|
%
|
|
18.3
|
%
|
|
70.0
|
|
|
120.0
|
|
|||
Effective tax rate
|
22.2
|
%
|
|
24.5
|
%
|
|
27.1
|
%
|
|
(230.0
|
)
|
|
(260.0
|
)
|
|||
Segment net sales
|
|
|
|
|
|
|
|
|
|
||||||||
Flavors
|
$
|
1,442,951
|
|
|
$
|
1,457,055
|
|
|
$
|
1,422,739
|
|
|
(1.0
|
)%
|
|
2.4
|
%
|
Fragrances
|
1,580,238
|
|
|
1,631,478
|
|
|
1,530,157
|
|
|
(3.1
|
)%
|
|
6.6
|
%
|
|||
Consolidated
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
|
|
|
(1)
|
Adjusted operating margin for the twelve months ended December 31, 2015 excludes acquisition related costs of
$18.3 million
, reversal of the previously recorded provision for the Spanish capital tax case of $10.5 million, accelerated contingent consideration payments of
$7.2 million
, Restructuring and other charges, net of
$7.6 million
and operational improvement initiative costs of
$1.1 million
. Adjusted operating margin for the twelve months ended December 31, 2014 excludes the operational improvement initiative costs of
$2.5 million
, Restructuring and other charges, net of
$1.3 million
and
$5.1 million
of accelerated depreciation included in Cost of goods sold related to the Fragrance Ingredients Rationalization and several locations in Asia. Adjusted operating margin for the twelve months ended December 31, 2013 excludes the operational improvement initiative costs of $2.3 million, Restructuring and other charges, net of $2.2 million, $6.7 million of accelerated depreciation included in Cost of goods sold related to the Fragrance Ingredients Rationalization and several locations in Asia, and the Spanish capital tax charge of $13.0 million.
|
|
|
% Change in Sales — 2015 vs 2014
|
||||||||||||||||
|
|
Fine Fragrances
|
|
Consumer Fragrances
|
|
Ingredients
|
|
Total
Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
-5
|
%
|
|
1
|
%
|
|
-7
|
%
|
|
-2
|
%
|
|
11
|
%
|
|
4
|
%
|
EAME
|
Reported
|
-9
|
%
|
|
-8
|
%
|
|
-7
|
%
|
|
-8
|
%
|
|
-11
|
%
|
|
-9
|
%
|
|
Currency Neutral
(1)
|
6
|
%
|
|
8
|
%
|
|
4
|
%
|
|
7
|
%
|
|
4
|
%
|
|
5
|
%
|
LA
|
Reported
|
-10
|
%
|
|
7
|
%
|
|
1
|
%
|
|
2
|
%
|
|
7
|
%
|
|
4
|
%
|
|
Currency Neutral
(1)
|
-5
|
%
|
|
10
|
%
|
|
3
|
%
|
|
6
|
%
|
|
16
|
%
|
|
9
|
%
|
GA
|
Reported
|
-2
|
%
|
|
—
|
%
|
|
3
|
%
|
|
—
|
%
|
|
-3
|
%
|
|
-2
|
%
|
|
Currency Neutral
(1)
|
-1
|
%
|
|
2
|
%
|
|
8
|
%
|
|
3
|
%
|
|
2
|
%
|
|
2
|
%
|
Total
|
Reported
|
-8
|
%
|
|
-1
|
%
|
|
-5
|
%
|
|
-3
|
%
|
|
-1
|
%
|
|
-2
|
%
|
|
Currency Neutral
(1)
|
1
|
%
|
|
5
|
%
|
|
2
|
%
|
|
4
|
%
|
|
6
|
%
|
|
5
|
%
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding
2015
period.
|
•
|
NOAM Flavors sales increased
11%
, which included the impact of acquisitions, primarily reflects high double-digit growth in Sweet and Dairy and double-digit growth in Beverage. Total Fragrances declined
2%
, reflecting double-digit declines in Toiletries, high single-digit declines in Fragrance Ingredients and mid single-digit declines in Fine Fragrance, which more than offset mid single-digit gains in Home Care and Fabric Care.
|
•
|
EAME Flavors currency neutral growth of
4%
primarily reflects mid single-digit gains in Savory and Beverage. Total Fragrances currency neutral growth of
7%
was driven by double-digit gains in the Fabric Care and mid single-digit growth in Fine Fragrance and Fragrance Ingredients, which included the impact of acquisitions.
|
•
|
LA Flavors currency neutral sales growth of
16%
was driven by double-digit gains in Beverage, Savory and Dairy. Total Fragrances currency neutral growth of
6%
reflects double-digit gains in Fabric Care, Home Care and Hair Care categories as well as low single-digit gains in Fragrance Ingredients, which offset mid single-digit declines in Fine Fragrance.
|
•
|
GA Flavors currency neutral sales growth of
2%
was led by low single-digit gains in Savory and Dairy, which more than offset low single-digit declines in Sweet. Total Fragrances currency neutral growth of
3%
primarily reflects high single-digit gains in Fragrance Ingredients and mid single-digit gains in Fabric Care.
|
|
For the Year Ended
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
318,476
|
|
|
$
|
331,257
|
|
Fragrances
|
321,764
|
|
|
335,447
|
|
||
Global Expenses
|
(28,180
|
)
|
|
(65,443
|
)
|
||
Restructuring and other charges, net
|
(7,594
|
)
|
|
(1,298
|
)
|
||
Spanish capital tax charge reversal
|
10,530
|
|
|
—
|
|
||
Operational improvement initiative costs
|
(1,115
|
)
|
|
(7,642
|
)
|
||
Acquisition related costs
|
(18,342
|
)
|
|
$
|
—
|
|
|
Accelerated contingent consideration
|
(7,192
|
)
|
|
$
|
—
|
|
|
Operating Profit
|
$
|
588,347
|
|
|
$
|
592,321
|
|
Profit margin
|
|
|
|
||||
Flavors
|
22.1
|
%
|
|
22.7
|
%
|
||
Fragrances
|
20.4
|
%
|
|
20.6
|
%
|
||
Consolidated
|
19.5
|
%
|
|
19.2
|
%
|
|
|
% Change in Sales — 2014 vs 2013
|
||||||||||||||||
|
|
Fine Fragrances
|
|
Consumer Fragrances
|
|
Ingredients
|
|
Total
Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
1
|
%
|
|
8
|
%
|
|
-1
|
%
|
|
4
|
%
|
|
-1
|
%
|
|
1
|
%
|
EAME
|
Reported
|
4
|
%
|
|
4
|
%
|
|
33
|
%
|
|
9
|
%
|
|
5
|
%
|
|
7
|
%
|
|
Currency Neutral
(1)
|
2
|
%
|
|
3
|
%
|
|
32
|
%
|
|
8
|
%
|
|
4
|
%
|
|
6
|
%
|
LA
|
Reported
|
-2
|
%
|
|
3
|
%
|
|
3
|
%
|
|
2
|
%
|
|
12
|
%
|
|
5
|
%
|
|
Currency Neutral
(1)
|
1
|
%
|
|
4
|
%
|
|
3
|
%
|
|
3
|
%
|
|
16
|
%
|
|
7
|
%
|
GA
|
Reported
|
8
|
%
|
|
7
|
%
|
|
31
|
%
|
|
10
|
%
|
|
0
|
%
|
|
4
|
%
|
|
Currency Neutral
(1)
|
9
|
%
|
|
8
|
%
|
|
33
|
%
|
|
11
|
%
|
|
3
|
%
|
|
6
|
%
|
Total
|
Reported
|
2
|
%
|
|
5
|
%
|
|
18
|
%
|
|
7
|
%
|
|
2
|
%
|
|
5
|
%
|
|
Currency Neutral
(1)
|
2
|
%
|
|
5
|
%
|
|
18
|
%
|
|
7
|
%
|
|
4
|
%
|
|
5
|
%
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2014 period.
|
•
|
NOAM reported sales growth of 1% reflecting a decline of 1% in Flavors as double-digit growth in Dairy was more than offset by volume declines in Sweet and Beverage, and 4% growth in Fragrances. Consumer Fragrances sales
|
•
|
EAME currency neutral growth reflects 4% growth in Flavors primarily resulting from double-digit gains in Beverages. This growth was mainly due to new wins within our emerging markets in the region, as well as volume increases. Total Fragrances growth of 8% was driven by double-digit growth in Fragrance Ingredients as well as high single-digit growth in Fabric Care.
|
•
|
LA currency neutral sales growth of 7% was driven by double-digit gains in Flavors, driven by Beverage. Total Fragrances growth reflects double-digit gains in Hair Care and mid single-digit gains in Fabric Care.
|
•
|
GA delivered currency neutral sales growth of 6%, led by mid single-digit gains in Savory. Both Consumer Fragrances and Fine Fragrances experienced high single-digit growth led by double-digit growth in Fabric Care and high single-digit growth in Fine Fragrances. In addition, GA experienced Fragrance Ingredients currency neutral sales growth of 33%.
|
|
For the Year Ended
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2014
|
|
2013
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
331,257
|
|
|
$
|
323,562
|
|
Fragrances
|
335,447
|
|
|
283,651
|
|
||
Global Expenses
|
(65,443
|
)
|
|
(66,942
|
)
|
||
Restructuring and other charges, net
|
(1,298
|
)
|
|
(2,151
|
)
|
||
Spanish capital tax charge
|
—
|
|
|
(13,011
|
)
|
||
Operational improvement initiative costs
|
(7,642
|
)
|
|
(8,770
|
)
|
||
Operating Profit
|
$
|
592,321
|
|
|
$
|
516,339
|
|
Profit margin
|
|
|
|
||||
Flavors
|
22.7
|
%
|
|
22.7
|
%
|
||
Fragrances
|
20.6
|
%
|
|
18.5
|
%
|
||
Consolidated
|
19.2
|
%
|
|
17.5
|
%
|
(1)
|
Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to adjusted EBITDA and Net Debt used by other companies. Reconciliations of adjusted EBITDA to net income and net debt to total debt are as follows:
|
|
12 Months Ended
December 31,
|
||||||
(DOLLARS IN MILLIONS)
|
2015
|
|
2014
|
||||
Net income
|
$
|
419.2
|
|
|
$
|
414.5
|
|
Interest expense
|
46.1
|
|
|
46.1
|
|
||
Income taxes
|
119.9
|
|
|
134.5
|
|
||
Depreciation and amortization
|
89.6
|
|
|
89.4
|
|
||
Specified items
(1)
|
14.8
|
|
|
1.3
|
|
||
Non-cash items
(2)
|
22.5
|
|
|
18.9
|
|
||
Adjusted EBITDA
|
$
|
712.1
|
|
|
$
|
704.7
|
|
(1)
|
Specified items for the 12 months ended
December 31, 2015
of
$14.8 million
consist of restructuring charges and the acceleration of the contingent consideration related to the Aromor acquisition as discussed in Note 2 to the Consolidated Financial Statements. Specified items for the 12 months ended
December 31, 2014
of
$1.3 million
consist of restructuring charges related to the Fragrance Ingredients Rationalization.
|
(2)
|
Non-cash items represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including gain on disposal of assets, stock-based compensation and pension settlement/curtailment.
|
|
December 31,
|
||||||
(DOLLARS IN MILLIONS)
|
2015
|
|
2014
|
||||
Total debt
|
$
|
1,070.2
|
|
|
$
|
942.3
|
|
Adjustments:
|
|
|
|
||||
Deferred gain on interest rate swaps
|
(3.2
|
)
|
|
(5.2
|
)
|
||
Cash and cash equivalents
|
(182.0
|
)
|
|
(478.6
|
)
|
||
Net debt
|
$
|
885.0
|
|
|
$
|
458.5
|
|
|
Payments Due
|
||||||||||||||||||
Contractual Obligations
(Dollars In Millions)
|
Total
|
|
2016
|
|
2017 - 2018
|
|
2019 - 2020
|
|
2021 and thereafter
|
||||||||||
Borrowings
(1)
|
$
|
1,056
|
|
|
$
|
125
|
|
|
$
|
250
|
|
|
$
|
231
|
|
|
$
|
450
|
|
Interest on borrowings
(1)
|
231
|
|
|
47
|
|
|
66
|
|
|
44
|
|
|
74
|
|
|||||
Operating leases
(2)
|
256
|
|
|
33
|
|
|
52
|
|
|
40
|
|
|
131
|
|
|||||
Pension funding obligations
(3)
|
84
|
|
|
28
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|||||
Postretirement obligations
(4)
|
78
|
|
|
5
|
|
|
9
|
|
|
10
|
|
|
54
|
|
|||||
Purchase commitments
(5)
|
121
|
|
|
88
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
1,826
|
|
|
$
|
326
|
|
|
$
|
466
|
|
|
$
|
325
|
|
|
$
|
709
|
|
(1)
|
See Note 9 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities.
|
(2)
|
Operating leases include facility and other lease commitments executed in the normal course of the business, including sale leaseback obligations included in Note 9 of the Notes to the Consolidated Financial Statements. Further details concerning worldwide aggregate operating leases are contained in Note 19 of the Notes to the Consolidated Financial Statements.
|
(3)
|
See Note 15 of the Notes to the Consolidated Financial Statements for a further discussion of our retirement plans. Anticipated funding obligations are based on current actuarial assumptions. The projected contributions beyond fiscal year
2018
are not currently determinable.
|
(4)
|
Amounts represent expected future benefit payments for our postretirement benefit plans.
|
(5)
|
Purchase commitments include agreements for raw material procurement and contractual capital expenditures. Amounts for purchase commitments represent only those items which are based on agreements that are enforceable and legally binding.
|
|
Sensitivity of Disclosures to Changes in Selected Assumptions
|
||||||||||||||
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Long-Term Rate
of Return
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Change in
PBO
|
|
Change in
ABO
|
|
Change in
pension expense
|
|
Change in
pension expense
|
||||||||
U.S. Pension Plans
|
$
|
17,519
|
|
|
$
|
17,359
|
|
|
$
|
(5
|
)
|
|
$
|
1,186
|
|
Non-U.S. Pension Plans
|
39,727
|
|
|
37,661
|
|
|
2,478
|
|
|
1,963
|
|
||||
Postretirement Benefit Plan
|
N/A
|
|
|
2,376
|
|
|
85
|
|
|
N/A
|
|
|
For the Year Ended December 31, 2015
|
|
Operating Profit
|
% Change - Reported (GAAP)
|
-1%
|
Items impacting comparability
(1)
|
3%
|
% Change - Adjusted (Non-GAAP)
|
2%
|
Currency Impact
|
6%
|
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP)**
|
8%
|
(DOLLARS IN THOUSANDS)
|
For the Year Ended December 31, 2015
|
Ottens Flavors
|
$4,310
|
Lucas Meyer Cosmetics
|
$3,249
|
•
|
the Company’s ability to successfully identify and complete acquisitions in line with its Vision 2020 strategy, and to realize the anticipated benefits of those acquisitions;
|
•
|
the Company’s ability to effectively compete in its market, and to successfully develop new and competitive products that appeal to its customers and consumers;
|
•
|
changes in consumer preferences and demand for the Company’s products or a decline in consumer confidence and spending;
|
•
|
the Company’s ability to benefit from its investments and expansion in emerging markets;
|
•
|
the impact of currency fluctuations or devaluations in the principal foreign markets in which the Company operates, including the devaluation of the Euro;
|
•
|
the economic and political risks associated with the Company’s international operations, including current challenging economic conditions in China and Latin America;
|
•
|
the impact of any failure of the Company’s key information technology systems or a breach of information security;
|
•
|
the Company’s ability to attract and retain talented employees;
|
•
|
the Company’s compliance with environmental protection laws;
|
•
|
the Company’s ability to realize expected cost savings and efficiencies from its profitability improvement initiatives and other optimization activities;
|
•
|
volatility and increases in the price of raw materials, energy and transportation;
|
•
|
fluctuations in the quality and availability of raw materials;
|
•
|
the impact of a disruption in the Company’s supply chain or its relationship with its suppliers;
|
•
|
any adverse impact on the availability, effectiveness and cost of the Company’s hedging and risk management strategies;
|
•
|
the Company’s ability to successfully manage its working capital and inventory balances;
|
•
|
uncertainties regarding the outcome of, or funding requirements, related to litigation or settlement of pending litigation, uncertain tax positions or other contingencies;
|
•
|
the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by U.S. and foreign governments;
|
•
|
adverse changes in federal, state, local and international tax legislation or policies and adverse results of tax audits, assessments, or disputes; and
|
•
|
changes in market conditions or governmental regulations relating to our pension and postretirement obligations.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
|
|
|
(a)(2) FINANCIAL STATEMENT SCHEDULES
|
|
|
|
/s/ PricewaterhouseCoopers LLP
|
New York, New York
|
March 1, 2016
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2015
|
|
2014
|
|
2013
|
||||||
Net sales
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
Cost of goods sold
|
1,671,590
|
|
|
1,726,383
|
|
|
1,668,691
|
|
|||
Gross profit
|
1,351,599
|
|
|
1,362,150
|
|
|
1,284,205
|
|
|||
Research and development expenses
|
246,101
|
|
|
253,640
|
|
|
259,838
|
|
|||
Selling and administrative expenses
|
509,557
|
|
|
514,891
|
|
|
505,877
|
|
|||
Restructuring and other charges, net
|
7,594
|
|
|
1,298
|
|
|
2,151
|
|
|||
Operating profit
|
588,347
|
|
|
592,321
|
|
|
516,339
|
|
|||
Interest expense
|
46,062
|
|
|
46,067
|
|
|
46,767
|
|
|||
Other expense (income), net
|
3,184
|
|
|
(2,807
|
)
|
|
(15,638
|
)
|
|||
Income before taxes
|
539,101
|
|
|
549,061
|
|
|
485,210
|
|
|||
Taxes on income
|
119,854
|
|
|
134,518
|
|
|
131,666
|
|
|||
Net income
|
419,247
|
|
|
414,543
|
|
|
353,544
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(124,156
|
)
|
|
(69,064
|
)
|
|
(10,556
|
)
|
|||
(Losses) gains on derivatives qualifying as hedges
|
(2,970
|
)
|
|
16,383
|
|
|
(3,794
|
)
|
|||
Pension and postretirement liability adjustment
|
54,117
|
|
|
(95,038
|
)
|
|
25,264
|
|
|||
Comprehensive income
|
$
|
346,238
|
|
|
$
|
266,824
|
|
|
$
|
364,458
|
|
|
|
|
|
|
|
||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net income per share — basic
|
$
|
5.19
|
|
|
$
|
5.09
|
|
|
$
|
4.32
|
|
Net income per share — diluted
|
$
|
5.16
|
|
|
$
|
5.06
|
|
|
$
|
4.29
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
181,988
|
|
|
$
|
478,573
|
|
Receivables:
|
|
|
|
||||
Trade
|
546,125
|
|
|
502,915
|
|
||
Allowance for doubtful accounts
|
(8,229
|
)
|
|
(9,147
|
)
|
||
Inventories
|
589,019
|
|
|
568,729
|
|
||
Deferred income taxes
|
—
|
|
|
27,709
|
|
||
Prepaid expenses and other current assets
|
146,981
|
|
|
141,248
|
|
||
Total Current Assets
|
1,455,884
|
|
|
1,710,027
|
|
||
Property, plant and equipment, net
|
732,794
|
|
|
720,268
|
|
||
Goodwill
|
941,389
|
|
|
675,484
|
|
||
Other intangible assets, net
|
306,004
|
|
|
76,557
|
|
||
Deferred income taxes
|
166,323
|
|
|
183,047
|
|
||
Other assets
|
119,060
|
|
|
129,238
|
|
||
Total Assets
|
$
|
3,721,454
|
|
|
$
|
3,494,621
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Bank borrowings, overdrafts and current portion of long-term debt
|
$
|
132,349
|
|
|
$
|
8,090
|
|
Accounts payable
|
302,473
|
|
|
216,038
|
|
||
Dividends payable
|
44,824
|
|
|
37,968
|
|
||
Other current liabilities
|
262,482
|
|
|
256,712
|
|
||
Total Current Liabilities
|
742,128
|
|
|
518,808
|
|
||
Other Liabilities:
|
|
|
|
||||
Long-term debt
|
937,844
|
|
|
934,232
|
|
||
Deferred gains
|
43,260
|
|
|
46,535
|
|
||
Retirement liabilities
|
242,383
|
|
|
354,333
|
|
||
Other liabilities
|
160,849
|
|
|
118,024
|
|
||
Total Other Liabilities
|
1,384,336
|
|
|
1,453,124
|
|
||
Commitments and Contingencies (Note 18)
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Common stock 12
1
/2¢ par value; authorized 500,000,000 shares; issued 115,858,190 shares as of December 31, 2015 and 2014; and outstanding 80,022,291 and 80,777,590 shares as of December 31, 2015 and 2014
|
14,470
|
|
|
14,470
|
|
||
Capital in excess of par value
|
140,802
|
|
|
140,008
|
|
||
Retained earnings
|
3,604,254
|
|
|
3,350,734
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
||||
Cumulative translation adjustments
|
(297,498
|
)
|
|
(173,342
|
)
|
||
Accumulated gains on derivatives qualifying as hedges
|
9,401
|
|
|
12,371
|
|
||
Pension and postretirement liability adjustment
|
(325,342
|
)
|
|
(379,459
|
)
|
||
Treasury stock, at cost - 35,835,899 and 35,080,600 shares as of December 31, 2015 and 2014
|
(1,555,769
|
)
|
|
(1,446,221
|
)
|
||
Total Shareholders’ Equity
|
1,590,318
|
|
|
1,518,561
|
|
||
Noncontrolling interest
|
4,672
|
|
|
4,128
|
|
||
Total Shareholders’ Equity including noncontrolling interest
|
1,594,990
|
|
|
1,522,689
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
3,721,454
|
|
|
$
|
3,494,621
|
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
419,247
|
|
|
$
|
414,543
|
|
|
$
|
353,544
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
89,597
|
|
|
89,354
|
|
|
83,227
|
|
|||
Deferred income taxes
|
13,043
|
|
|
23,350
|
|
|
(484
|
)
|
|||
Gain on disposal of assets
|
(622
|
)
|
|
(3,768
|
)
|
|
(17,841
|
)
|
|||
Stock-based compensation
|
23,160
|
|
|
22,648
|
|
|
23,736
|
|
|||
Pension contributions
|
(67,897
|
)
|
|
(43,982
|
)
|
|
(52,897
|
)
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade receivables
|
(91,712
|
)
|
|
(2,635
|
)
|
|
(53,156
|
)
|
|||
Inventories
|
(37,628
|
)
|
|
(40,042
|
)
|
|
4,822
|
|
|||
Accounts payable
|
89,273
|
|
|
19,403
|
|
|
21,313
|
|
|||
Accruals for incentive compensation
|
(17,399
|
)
|
|
(30,947
|
)
|
|
24,518
|
|
|||
Other current payables and accrued expenses
|
29,124
|
|
|
(30,982
|
)
|
|
(1,244
|
)
|
|||
Other assets/liabilities, net
|
(14,608
|
)
|
|
101,448
|
|
|
22,024
|
|
|||
Net cash provided by operating activities
|
433,578
|
|
|
518,390
|
|
|
407,562
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Cash paid for acquisitions, net of cash received (including $15 million of contingent consideration related to the Aromor acquisition in 2014)
|
(493,424
|
)
|
|
(102,500
|
)
|
|
—
|
|
|||
Additions to property, plant and equipment
|
(101,030
|
)
|
|
(143,182
|
)
|
|
(134,157
|
)
|
|||
Proceeds from disposal of assets
|
4,302
|
|
|
3,295
|
|
|
27,312
|
|
|||
Maturity of net investment hedges
|
12,128
|
|
|
3,304
|
|
|
646
|
|
|||
Proceeds from life insurance contracts
|
868
|
|
|
17,750
|
|
|
793
|
|
|||
Net cash used in investing activities
|
(577,156
|
)
|
|
(221,333
|
)
|
|
(105,406
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Cash dividends paid to shareholders
|
(158,870
|
)
|
|
(133,239
|
)
|
|
(87,347
|
)
|
|||
Net change in revolving credit facility borrowings and overdrafts
|
136,826
|
|
|
8,332
|
|
|
(283,225
|
)
|
|||
Deferred financing costs
|
—
|
|
|
(1,023
|
)
|
|
(2,800
|
)
|
|||
Repayments of debt
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|||
Proceeds from issuance or drawdown of long-term debt
|
—
|
|
|
3,609
|
|
|
297,786
|
|
|||
Proceeds from issuance of stock under stock plans
|
886
|
|
|
1,864
|
|
|
3,799
|
|
|||
Excess tax benefits on stock-based payments
|
12,055
|
|
|
6,330
|
|
|
6,112
|
|
|||
Purchase of treasury stock
|
(122,193
|
)
|
|
(88,203
|
)
|
|
(51,363
|
)
|
|||
Net cash used in financing activities
|
(131,296
|
)
|
|
(202,330
|
)
|
|
(217,038
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(21,711
|
)
|
|
(21,659
|
)
|
|
(4,035
|
)
|
|||
Net change in cash and cash equivalents
|
(296,585
|
)
|
|
73,068
|
|
|
81,083
|
|
|||
Cash and cash equivalents at beginning of year
|
478,573
|
|
|
405,505
|
|
|
324,422
|
|
|||
Cash and cash equivalents at end of year
|
$
|
181,988
|
|
|
$
|
478,573
|
|
|
$
|
405,505
|
|
Cash paid for:
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
46,760
|
|
|
$
|
46,106
|
|
|
$
|
48,165
|
|
Income taxes
|
$
|
102,734
|
|
|
$
|
92,087
|
|
|
$
|
138,940
|
|
Noncash investing activities:
|
|
|
|
|
|
||||||
Accrued capital expenditures
|
$
|
26,030
|
|
|
$
|
14,376
|
|
|
$
|
21,744
|
|
(DOLLARS IN THOUSANDS)
|
Common
stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumulated other
comprehensive
(loss) income
|
|
Treasury stock
|
|
Non-controlling
interest
|
|||||||||||||||
Shares
|
|
Cost
|
|
|||||||||||||||||||||||
Balance at December 31, 2012
|
$
|
14,470
|
|
|
$
|
127,504
|
|
|
$
|
2,841,166
|
|
|
$
|
(403,625
|
)
|
|
(34,134,966
|
)
|
|
$
|
(1,330,707
|
)
|
|
$
|
3,747
|
|
Net income
|
|
|
|
|
353,544
|
|
|
|
|
|
|
|
|
232
|
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(10,556
|
)
|
|
|
|
|
|
|
||||||||||||
Losses on derivatives qualifying as hedges; net of tax $429
|
|
|
|
|
|
|
(3,794
|
)
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $22,778
|
|
|
|
|
|
|
25,264
|
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($1.46 per share)
|
|
|
|
|
(119,053
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options
|
|
|
10,395
|
|
|
|
|
|
|
157,403
|
|
|
6,196
|
|
|
|
||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(655,907
|
)
|
|
(51,363
|
)
|
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(26,735
|
)
|
|
|
|
|
|
159,559
|
|
|
6,277
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
20,297
|
|
|
|
|
|
|
96,317
|
|
|
3,792
|
|
|
|
||||||||||
Balance at December 31, 2013
|
$
|
14,470
|
|
|
$
|
131,461
|
|
|
$
|
3,075,657
|
|
|
$
|
(392,711
|
)
|
|
(34,377,594
|
)
|
|
$
|
(1,365,805
|
)
|
|
$
|
3,979
|
|
Net income
|
|
|
|
|
414,543
|
|
|
|
|
|
|
|
|
149
|
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(69,064
|
)
|
|
|
|
|
|
|
||||||||||||
Gains on derivatives qualifying as hedges; net of tax $(2,526)
|
|
|
|
|
|
|
16,383
|
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $36,554
|
|
|
|
|
|
|
(95,038
|
)
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($1.72 per share)
|
|
|
|
|
(139,466
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options
|
|
|
9,770
|
|
|
|
|
|
|
87,706
|
|
|
3,590
|
|
|
|
||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(927,339
|
)
|
|
(88,959
|
)
|
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(23,871
|
)
|
|
|
|
|
|
136,627
|
|
|
4,953
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
22,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2014
|
$
|
14,470
|
|
|
$
|
140,008
|
|
|
$
|
3,350,734
|
|
|
$
|
(540,430
|
)
|
|
(35,080,600
|
)
|
|
$
|
(1,446,221
|
)
|
|
$
|
4,128
|
|
Net income
|
|
|
|
|
419,247
|
|
|
|
|
|
|
|
|
544
|
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(124,156
|
)
|
|
|
|
|
|
|
||||||||||||
Losses on derivatives qualifying as hedges; net of tax $463
|
|
|
|
|
|
|
(2,970
|
)
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $29,452
|
|
|
|
|
|
|
54,117
|
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($2.06 per share)
|
|
|
|
|
(165,727
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options
|
|
|
6,099
|
|
|
|
|
|
|
194,016
|
|
|
7,085
|
|
|
|
||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(1,074,210
|
)
|
|
(121,193
|
)
|
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(28,465
|
)
|
|
|
|
|
|
124,895
|
|
|
4,560
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
23,160
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||||||
Balance at December 31, 2015
|
$
|
14,470
|
|
|
$
|
140,802
|
|
|
$
|
3,604,254
|
|
|
$
|
(613,439
|
)
|
|
(35,835,899
|
)
|
|
$
|
(1,555,769
|
)
|
|
$
|
4,672
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Raw materials
|
$
|
282,181
|
|
|
$
|
275,161
|
|
Work in process
|
17,450
|
|
|
17,705
|
|
||
Finished goods
|
289,388
|
|
|
275,863
|
|
||
Total
|
$
|
589,019
|
|
|
$
|
568,729
|
|
|
Number of Shares
|
|||||||
(SHARES IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
|||
Basic
|
80,449
|
|
|
80,936
|
|
|
81,322
|
|
Assumed dilution under stock plans
|
442
|
|
|
558
|
|
|
608
|
|
Diluted
|
80,891
|
|
|
81,494
|
|
|
81,930
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2014
|
||||||
Deferred Tax:
|
As Presented
|
|
Presentation if adoption were retroactive
|
||||
Assets
|
|
|
|
||||
Current
|
$
|
27,709
|
|
|
$
|
—
|
|
Noncurrent
|
183,047
|
|
|
208,455
|
|
||
Liabilities
|
|
|
|
||||
Current
|
(882
|
)
|
|
—
|
|
||
Noncurrent
|
(11,882
|
)
|
|
(10,463
|
)
|
||
Total Net Deferred Tax Asset
|
$
|
197,992
|
|
|
$
|
197,992
|
|
(DOLLARS IN THOUSANDS)
|
Employee-
Related
|
|
Asset -
Related/and
Other
|
|
Total
|
||||||
Balance at January 1, 2013
|
$
|
3,149
|
|
|
$
|
—
|
|
|
$
|
3,149
|
|
Additional charges (reversals), net
|
2,151
|
|
|
5,250
|
|
|
7,401
|
|
|||
Non-cash charges
|
—
|
|
|
(5,250
|
)
|
|
(5,250
|
)
|
|||
Payments and other costs
|
(3,184
|
)
|
|
—
|
|
|
(3,184
|
)
|
|||
Balance at December 31, 2013
|
2,116
|
|
|
—
|
|
|
2,116
|
|
|||
Additional charges (reversals), net
|
(46
|
)
|
|
6,444
|
|
|
6,398
|
|
|||
Non-cash charges
|
|
|
|
(5,100
|
)
|
|
(5,100
|
)
|
|||
Payments and other costs
|
(1,311
|
)
|
|
(1,344
|
)
|
|
(2,655
|
)
|
|||
Balance at December 31, 2014
|
759
|
|
|
—
|
|
|
759
|
|
|||
Additional charges (reversals), net
|
7,594
|
|
|
—
|
|
|
7,594
|
|
|||
Non-cash charges
|
—
|
|
|
—
|
|
|
—
|
|
|||
Payments and other costs
|
(471
|
)
|
|
—
|
|
|
(471
|
)
|
|||
Balance at December 31, 2015
|
$
|
7,882
|
|
|
$
|
—
|
|
|
$
|
7,882
|
|
(DOLLARS IN THOUSANDS)
|
December 31,
|
||||||
2015
|
|
2014
|
|||||
Asset Type
|
|
|
|
||||
Land
|
$
|
22,896
|
|
|
$
|
16,448
|
|
Buildings and improvements
|
538,096
|
|
|
411,157
|
|
||
Machinery and equipment
|
991,746
|
|
|
935,340
|
|
||
Information technology
|
183,759
|
|
|
257,092
|
|
||
Construction in process
|
75,786
|
|
|
146,709
|
|
||
|
1,812,283
|
|
|
1,766,746
|
|
||
Accumulated depreciation
|
(1,079,489
|
)
|
|
(1,046,478
|
)
|
||
|
$
|
732,794
|
|
|
$
|
720,268
|
|
(DOLLARS IN THOUSANDS)
|
Goodwill
|
||
Balance at January 1, 2013
|
$
|
665,582
|
|
Acquisitions
|
—
|
|
|
Balance at December 31, 2013
|
665,582
|
|
|
Acquisitions
|
9,902
|
|
|
Balance at December 31, 2014
|
675,484
|
|
|
Acquisitions
|
265,905
|
|
|
Balance at December 31, 2015
|
$
|
941,389
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Flavors
|
$
|
401,494
|
|
|
$
|
319,479
|
|
Fragrances
|
539,895
|
|
|
356,005
|
|
||
Total
|
$
|
941,389
|
|
|
$
|
675,484
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Asset Type
|
|
|
|
||||
Customer relationships
|
$
|
293,799
|
|
|
$
|
82,155
|
|
Trade names & patents
|
34,182
|
|
|
11,460
|
|
||
Technological know-how
|
112,393
|
|
|
107,691
|
|
||
Other
|
22,711
|
|
|
17,370
|
|
||
Total carrying value
|
463,085
|
|
|
218,676
|
|
||
|
|
|
|
||||
Customer relationships
|
(66,324
|
)
|
|
(56,235
|
)
|
||
Trade names & patents
|
(10,282
|
)
|
|
(8,686
|
)
|
||
Technological know-how
|
(65,258
|
)
|
|
(62,699
|
)
|
||
Other
|
(15,217
|
)
|
|
(14,499
|
)
|
||
Total accumulated amortization
|
(157,081
|
)
|
|
(142,119
|
)
|
||
|
|
|
|
||||
Other intangible assets, net
|
$
|
306,004
|
|
|
$
|
76,557
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Overfunded pension plans
|
$
|
4,906
|
|
|
$
|
1,338
|
|
Cash surrender value of life insurance contracts
|
41,957
|
|
|
42,378
|
|
||
Other
|
72,197
|
|
|
85,522
|
|
||
Total
|
$
|
119,060
|
|
|
$
|
129,238
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Accrued payrolls and bonuses
|
$
|
48,843
|
|
|
$
|
71,264
|
|
VAT payable
|
10,241
|
|
|
15,125
|
|
||
Interest payable
|
12,515
|
|
|
12,974
|
|
||
Current pension and other postretirement benefit obligation
|
10,620
|
|
|
11,902
|
|
||
Accrued insurance (including workers’ compensation)
|
10,857
|
|
|
10,718
|
|
||
Restructuring and other charges
|
7,882
|
|
|
759
|
|
||
Other
|
161,524
|
|
|
133,970
|
|
||
Total
|
$
|
262,482
|
|
|
$
|
256,712
|
|
(DOLLARS IN THOUSANDS)
|
Rate
|
|
Maturities
|
|
2015
|
|
2014
|
|||||
Senior notes — 2006
|
6.14
|
%
|
|
2016
|
|
125,000
|
|
|
125,000
|
|
||
Senior notes — 2007
|
6.40
|
%
|
|
2017-27
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Senior notes — 2013
|
3.20
|
%
|
|
2023
|
|
299,809
|
|
|
299,782
|
|
||
Credit facilities
|
1.13
|
%
|
|
2019
|
|
131,196
|
|
|
—
|
|
||
Bank overdrafts and other
|
|
|
|
|
|
10,909
|
|
|
12,335
|
|
||
Deferred realized gains on interest rate swaps
|
|
|
|
|
3,279
|
|
|
5,205
|
|
|||
|
|
|
|
|
1,070,193
|
|
|
942,322
|
|
|||
Less: Current portion of long-term debt
|
|
|
|
|
(132,349
|
)
|
|
(8,090
|
)
|
|||
|
|
|
|
|
$
|
937,844
|
|
|
$
|
934,232
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
U.S. income (loss) before taxes
|
$
|
29,792
|
|
|
$
|
17,650
|
|
|
$
|
(20,727
|
)
|
Foreign income before taxes
|
509,309
|
|
|
531,411
|
|
|
505,937
|
|
|||
Total income before taxes
|
$
|
539,101
|
|
|
$
|
549,061
|
|
|
$
|
485,210
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
7,648
|
|
|
$
|
1,175
|
|
|
$
|
8,658
|
|
State and local
|
199
|
|
|
264
|
|
|
1,246
|
|
|||
Foreign
|
98,964
|
|
|
109,729
|
|
|
122,246
|
|
|||
|
106,811
|
|
|
111,168
|
|
|
132,150
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
14,379
|
|
|
20,795
|
|
|
(4,686
|
)
|
|||
State and local
|
399
|
|
|
113
|
|
|
262
|
|
|||
Foreign
|
(1,735
|
)
|
|
2,442
|
|
|
3,940
|
|
|||
|
13,043
|
|
|
23,350
|
|
|
(484
|
)
|
|||
Total income taxes
|
$
|
119,854
|
|
|
$
|
134,518
|
|
|
$
|
131,666
|
|
|
December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Statutory tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Difference in effective tax rate on foreign earnings and remittances
|
(10.7
|
)
|
|
(9.9
|
)
|
|
(10.2
|
)
|
Unrecognized tax benefit, net of reversals
|
(0.8
|
)
|
|
0.8
|
|
|
1.0
|
|
Spanish tax charges
|
(0.4
|
)
|
|
—
|
|
|
1.3
|
|
Spanish dividend withholdings
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
State and local taxes
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
Other, net
|
(1.0
|
)
|
|
(0.8
|
)
|
|
(0.2
|
)
|
Effective tax rate
|
22.2
|
%
|
|
24.5
|
%
|
|
27.1
|
%
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
||||
Employee and retiree benefits
|
$
|
128,429
|
|
|
$
|
164,542
|
|
Credit and net operating loss carryforwards
(1)
|
183,594
|
|
|
180,296
|
|
||
Trademarks and other
|
143,727
|
|
|
169,088
|
|
||
Amortizable R&D expenses
|
56,091
|
|
|
48,982
|
|
||
Other, net
|
14,026
|
|
|
17,320
|
|
||
Gross deferred tax assets
|
525,867
|
|
|
580,228
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
(11,337
|
)
|
|
(7,275
|
)
|
||
Trademarks and other
|
(72,710
|
)
|
|
(19,393
|
)
|
||
Gross deferred tax liabilities
|
(84,047
|
)
|
|
(26,668
|
)
|
||
|
|
|
|
||||
Valuation allowance
(1)
|
(339,395
|
)
|
|
(355,568
|
)
|
||
Total net deferred tax assets
|
$
|
102,425
|
|
|
$
|
197,992
|
|
(1)
|
During
2015
and
2014
, the Company increased its deferred tax assets by
$10.0 million
and decreased its deferred tax assets by
$81.0 million
, respectively, relating to an adjustment to the 2014 and 2013 foreign net operating loss carryforwards, respectively. The entire adjustments of
$10.0 million
and
$81.0 million
were offset by corresponding adjustments in valuation allowances. These adjustments are not considered material to the previously issued financial statements.
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Balance of unrecognized tax benefits at beginning of year
|
$
|
23,055
|
|
|
$
|
21,553
|
|
|
$
|
41,153
|
|
Gross amount of increases in unrecognized tax benefits as a result of positions taken during a prior year
|
18
|
|
|
1,795
|
|
|
7,364
|
|
|||
Gross amount of decreases in unrecognized tax benefits as a result of positions taken during a prior year
|
(43
|
)
|
|
(823
|
)
|
|
(993
|
)
|
|||
Gross amount of increases in unrecognized tax benefits as a result of positions taken during the current year
|
12,011
|
|
|
5,378
|
|
|
4,951
|
|
|||
The amounts of decreases in unrecognized benefits relating to settlements with taxing authorities
|
(10,221
|
)
|
|
—
|
|
|
(26,712
|
)
|
|||
Reduction in unrecognized tax benefits due to the lapse of applicable statute of limitation
|
(622
|
)
|
|
(4,848
|
)
|
|
(4,210
|
)
|
|||
Balance of unrecognized tax benefits at end of year
|
$
|
24,198
|
|
|
$
|
23,055
|
|
|
$
|
21,553
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Equity-based awards
|
$
|
23,160
|
|
|
$
|
22,648
|
|
|
$
|
23,736
|
|
Liability-based awards
|
4,784
|
|
|
4,354
|
|
|
4,042
|
|
|||
Total stock-based compensation
|
27,944
|
|
|
27,002
|
|
|
27,778
|
|
|||
Less tax benefit
|
(8,348
|
)
|
|
(8,018
|
)
|
|
(8,456
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
19,596
|
|
|
$
|
18,984
|
|
|
$
|
19,322
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Shares Subject to
SSARs/Options
|
|
Weighted
Average Exercise
Price
|
|
SSARs/
Options
Exercisable
|
||||
Balance at December 31, 2014
|
151
|
|
|
$
|
51.13
|
|
|
116
|
|
Exercised
|
(113
|
)
|
|
64.66
|
|
|
|
||
Balance at December 31, 2015
|
38
|
|
|
$
|
52.10
|
|
|
38
|
|
Price Range
|
Number
Outstanding
(in thousands)
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
$26 – $30
|
1
|
|
|
0.4
|
|
$
|
30.48
|
|
|
|
||
$31 – $35
|
—
|
|
|
0.0
|
|
—
|
|
|
|
|||
$36 – $40
|
5
|
|
|
0.4
|
|
36.00
|
|
|
|
|||
$41 – $50
|
—
|
|
|
0.0
|
|
—
|
|
|
|
|||
$51 – $60
|
24
|
|
|
1.4
|
|
52.80
|
|
|
|
|||
$61 – $65
|
8
|
|
|
2.4
|
|
62.13
|
|
|
|
|||
|
38
|
|
|
|
|
$
|
52.59
|
|
|
$
|
2,566
|
|
Price Range
|
Number
Exercisable
(in thousands)
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
$26 – $30
|
1
|
|
|
0.4
|
|
$
|
30.48
|
|
|
|
||
$31 – $35
|
—
|
|
|
0.0
|
|
—
|
|
|
|
|||
$36 – $40
|
5
|
|
|
0.4
|
|
36.00
|
|
|
|
|||
$41 – $50
|
—
|
|
|
0.0
|
|
—
|
|
|
|
|||
$51 – $60
|
24
|
|
|
1.4
|
|
52.80
|
|
|
|
|||
$61 - $65
|
8
|
|
|
2.4
|
|
62.13
|
|
|
|
|||
|
38
|
|
|
|
|
$
|
52.10
|
|
|
$
|
2,565
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
Balance at December 31, 2014
|
522
|
|
|
$
|
74.83
|
|
Granted
|
189
|
|
|
112.02
|
|
|
Vested
|
(196
|
)
|
|
60.50
|
|
|
Forfeited
|
(20
|
)
|
|
93.20
|
|
|
Balance at December 31, 2015
|
495
|
|
|
$
|
93.88
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
Balance at December 31, 2014
|
380
|
|
|
$
|
57.36
|
|
Granted
|
53
|
|
|
118.10
|
|
|
Vested
|
(206
|
)
|
|
32.18
|
|
|
Forfeited
|
(8
|
)
|
|
96.46
|
|
|
Balance at December 31, 2015
|
219
|
|
|
$
|
94.03
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Cash RSUs
|
|
Weighted Average Fair
Value Per Share
|
|||
Balance at December 31, 2014
|
106
|
|
|
$
|
100.85
|
|
Granted
|
34
|
|
|
119.64
|
|
|
Vested
|
(38
|
)
|
|
117.17
|
|
|
Forfeited
|
(3
|
)
|
|
115.24
|
|
|
Balance at December 31, 2015
|
99
|
|
|
$
|
119.64
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Net sales
|
|
|
|
|
|
||||||
Flavors
|
$
|
1,442,951
|
|
|
$
|
1,457,055
|
|
|
$
|
1,422,739
|
|
Fragrances
|
1,580,238
|
|
|
1,631,478
|
|
|
1,530,157
|
|
|||
Consolidated
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
|
|
|
|
|
||||||
|
December 31,
|
|
|
||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
|
||||||
Segment assets
|
|
|
|
|
|
||||||
Flavors
|
$
|
1,607,577
|
|
|
$
|
1,539,254
|
|
|
|
||
Fragrances
|
1,989,020
|
|
|
1,753,477
|
|
|
|
||||
Global assets
|
124,857
|
|
|
201,890
|
|
|
|
||||
Consolidated
|
$
|
3,721,454
|
|
|
$
|
3,494,621
|
|
|
|
||
|
|
|
|
|
|
||||||
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Segment profit:
|
|
|
|
|
|
||||||
Flavors
|
$
|
318,476
|
|
|
$
|
331,257
|
|
|
$
|
323,562
|
|
Fragrances
|
321,764
|
|
|
335,447
|
|
|
283,651
|
|
|||
Global expenses
|
(28,180
|
)
|
|
(65,443
|
)
|
|
(66,942
|
)
|
|||
Restructuring and other charges, net
|
(7,594
|
)
|
|
(1,298
|
)
|
|
(2,151
|
)
|
|||
Spanish capital tax charge/reversal
(1)
|
10,530
|
|
|
—
|
|
|
(13,011
|
)
|
|||
Acquisition related costs
(2)
|
(18,342
|
)
|
|
—
|
|
|
—
|
|
|||
Operational improvement initiative costs
(3)
|
(1,115
|
)
|
|
(7,642
|
)
|
|
(8,770
|
)
|
|||
Accelerated contingent consideration
(4)
|
(7,192
|
)
|
|
—
|
|
|
—
|
|
|||
Operating Profit
|
588,347
|
|
|
592,321
|
|
|
516,339
|
|
|||
Interest expense
|
(46,062
|
)
|
|
(46,067
|
)
|
|
(46,767
|
)
|
|||
Other income (expense), net
(5)
|
(3,184
|
)
|
|
2,807
|
|
|
15,638
|
|
|||
Income before taxes
|
$
|
539,101
|
|
|
$
|
549,061
|
|
|
$
|
485,210
|
|
Profit margin
|
|
|
|
|
|
||||||
Flavors
|
22.1
|
%
|
|
22.7
|
%
|
|
22.7
|
%
|
|||
Fragrances
|
20.4
|
%
|
|
20.6
|
%
|
|
18.5
|
%
|
|||
Consolidated
|
19.5
|
%
|
|
19.2
|
%
|
|
17.5
|
%
|
|
Capital Expenditures
|
|
Depreciation and Amortization
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Flavors
|
$
|
39,416
|
|
|
$
|
91,104
|
|
|
$
|
108,215
|
|
|
$
|
45,228
|
|
|
$
|
36,008
|
|
|
$
|
33,662
|
|
Fragrances
|
50,597
|
|
|
43,948
|
|
|
17,616
|
|
|
39,614
|
|
|
43,790
|
|
|
39,716
|
|
||||||
Unallocated assets
|
11,017
|
|
|
8,130
|
|
|
8,326
|
|
|
4,755
|
|
|
9,556
|
|
|
9,849
|
|
||||||
Consolidated
|
$
|
101,030
|
|
|
$
|
143,182
|
|
|
$
|
134,157
|
|
|
$
|
89,597
|
|
|
$
|
89,354
|
|
|
$
|
83,227
|
|
|
Net Sales by Geographic Area
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Europe, Africa and Middle East
|
$
|
945,675
|
|
|
$
|
1,041,585
|
|
|
$
|
971,921
|
|
Greater Asia
|
839,120
|
|
|
856,217
|
|
|
823,504
|
|
|||
North America
|
718,614
|
|
|
690,214
|
|
|
680,840
|
|
|||
Latin America
|
519,780
|
|
|
500,517
|
|
|
476,631
|
|
|||
Consolidated
|
$
|
3,023,189
|
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost for benefits earned
|
$
|
3,144
|
|
|
$
|
3,057
|
|
|
$
|
3,644
|
|
|
$
|
15,866
|
|
|
$
|
14,142
|
|
|
$
|
16,423
|
|
Interest cost on projected benefit obligation
|
23,705
|
|
|
25,090
|
|
|
23,284
|
|
|
25,389
|
|
|
33,360
|
|
|
31,103
|
|
||||||
Expected return on plan assets
|
(32,405
|
)
|
|
(27,647
|
)
|
|
(26,320
|
)
|
|
(50,437
|
)
|
|
(49,861
|
)
|
|
(47,793
|
)
|
||||||
Net amortization of deferrals
|
21,390
|
|
|
17,656
|
|
|
24,600
|
|
|
12,864
|
|
|
10,584
|
|
|
9,337
|
|
||||||
Settlements and curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
215
|
|
||||||
Net periodic benefit cost
|
15,834
|
|
|
18,156
|
|
|
25,208
|
|
|
3,682
|
|
|
8,268
|
|
|
9,285
|
|
||||||
Defined contribution and other retirement plans
|
7,104
|
|
|
7,854
|
|
|
7,326
|
|
|
7,028
|
|
|
6,323
|
|
|
4,094
|
|
||||||
Total expense
|
$
|
22,938
|
|
|
$
|
26,010
|
|
|
$
|
32,534
|
|
|
$
|
10,710
|
|
|
$
|
14,591
|
|
|
$
|
13,379
|
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
$
|
7,623
|
|
|
$
|
50,918
|
|
|
|
|
$
|
3,848
|
|
|
$
|
138,652
|
|
|
|
||||
Recognized actuarial loss
|
(21,207
|
)
|
|
(17,345
|
)
|
|
|
|
(13,629
|
)
|
|
(10,874
|
)
|
|
|
||||||||
Prior service cost
|
—
|
|
|
216
|
|
|
|
|
459
|
|
|
(10,814
|
)
|
|
|
||||||||
Recognized prior service cost
|
(183
|
)
|
|
(311
|
)
|
|
|
|
765
|
|
|
248
|
|
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
|
|
(25,230
|
)
|
|
(30,441
|
)
|
|
|
||||||||
Total recognized in OCI (before tax effects)
|
$
|
(13,767
|
)
|
|
$
|
33,478
|
|
|
|
|
$
|
(33,787
|
)
|
|
$
|
86,771
|
|
|
|
|
Postretirement Benefits
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2013
|
||||||
Components of net periodic benefit cost
|
|
|
|
|
|
||||||
Service cost for benefits earned
|
$
|
966
|
|
|
$
|
1,295
|
|
|
$
|
1,526
|
|
Interest cost on projected benefit obligation
|
3,904
|
|
|
4,896
|
|
|
4,503
|
|
|||
Net amortization and deferrals
|
(4,476
|
)
|
|
(4,109
|
)
|
|
(3,040
|
)
|
|||
Expense
|
$
|
394
|
|
|
$
|
2,082
|
|
|
$
|
2,989
|
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
||||||
Net actuarial (gain)
|
$
|
(1,557
|
)
|
|
$
|
7,706
|
|
|
|
||
Recognized actuarial loss
|
(1,331
|
)
|
|
(540
|
)
|
|
|
||||
Prior service credit
|
(33,902
|
)
|
|
—
|
|
|
|
||||
Recognized prior service credit
|
5,807
|
|
|
4,649
|
|
|
|
||||
Total recognized in OCI (before tax effects)
|
$
|
(30,983
|
)
|
|
$
|
11,815
|
|
|
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Actuarial loss recognition
|
$
|
5,484
|
|
|
$
|
13,863
|
|
|
$
|
1,369
|
|
Prior service cost (credit) recognition
|
62
|
|
|
(729
|
)
|
|
(6,789
|
)
|
Weighted-average actuarial
assumption used to determine expense
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
|||||||
Discount rate
|
3.90
|
%
|
|
4.70
|
%
|
|
4.10
|
%
|
|
2.74
|
%
|
|
4.18
|
%
|
|
4.14
|
%
|
Expected return on plan assets
|
7.30
|
%
|
|
7.30
|
%
|
|
7.30
|
%
|
|
6.24
|
%
|
|
6.27
|
%
|
|
6.26
|
%
|
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
2.00
|
%
|
|
2.66
|
%
|
|
2.73
|
%
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||
Benefit obligation at beginning of year
|
$
|
625,479
|
|
|
$
|
544,602
|
|
|
$
|
965,266
|
|
|
$
|
818,578
|
|
|
$
|
113,497
|
|
|
$
|
105,521
|
|
Service cost for benefits earned
|
3,144
|
|
|
3,057
|
|
|
15,866
|
|
|
14,142
|
|
|
966
|
|
|
1,295
|
|
||||||
Interest cost on projected benefit obligation
|
23,705
|
|
|
25,090
|
|
|
25,389
|
|
|
33,360
|
|
|
3,904
|
|
|
4,896
|
|
||||||
Actuarial (gain) loss
|
(36,338
|
)
|
|
79,855
|
|
|
(47,883
|
)
|
|
236,096
|
|
|
(1,557
|
)
|
|
7,706
|
|
||||||
Plan amendments
|
—
|
|
|
216
|
|
|
459
|
|
|
(10,814
|
)
|
|
(33,902
|
)
|
|
—
|
|
||||||
Adjustments for expense/tax contained in service cost
|
—
|
|
|
—
|
|
|
(1,976
|
)
|
|
(2,087
|
)
|
|
—
|
|
|
—
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
1,790
|
|
|
2,096
|
|
|
809
|
|
|
1,024
|
|
||||||
Benefits paid
|
(28,479
|
)
|
|
(27,341
|
)
|
|
(29,121
|
)
|
|
(32,134
|
)
|
|
(6,569
|
)
|
|
(6,945
|
)
|
||||||
Curtailments / settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,270
|
)
|
|
—
|
|
|
—
|
|
||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
(69,550
|
)
|
|
(86,413
|
)
|
|
—
|
|
|
—
|
|
||||||
Acquisitions/Transferred Liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
1,712
|
|
|
—
|
|
|
—
|
|
||||||
Benefit obligation at end of year
|
$
|
587,511
|
|
|
$
|
625,479
|
|
|
$
|
860,240
|
|
|
$
|
965,266
|
|
|
$
|
77,148
|
|
|
$
|
113,497
|
|
Fair value of plan assets at beginning of year
|
$
|
501,801
|
|
|
$
|
448,851
|
|
|
$
|
852,893
|
|
|
$
|
799,670
|
|
|
|
|
|
||||
Actual return on plan assets
|
(11,556
|
)
|
|
56,584
|
|
|
(3,271
|
)
|
|
135,947
|
|
|
|
|
|
||||||||
Employer contributions
|
38,545
|
|
|
23,707
|
|
|
29,352
|
|
|
20,282
|
|
|
|
|
|
||||||||
Participants’ contributions
|
—
|
|
|
—
|
|
|
1,790
|
|
|
2,096
|
|
|
|
|
|
||||||||
Benefits paid
|
(28,479
|
)
|
|
(27,341
|
)
|
|
(29,121
|
)
|
|
(32,134
|
)
|
|
|
|
|
||||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
(61,029
|
)
|
|
(74,680
|
)
|
|
|
|
|
||||||||
Acquisitions/Transferred Assets
|
—
|
|
|
—
|
|
|
—
|
|
|
1,712
|
|
|
|
|
|
||||||||
Fair value of plan assets at end of year
|
$
|
500,311
|
|
|
$
|
501,801
|
|
|
$
|
790,614
|
|
|
$
|
852,893
|
|
|
|
|
|
||||
Funded status at end of year
|
$
|
(87,200
|
)
|
|
$
|
(123,678
|
)
|
|
$
|
(69,626
|
)
|
|
$
|
(112,373
|
)
|
|
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Amounts recognized in the balance sheet:
|
|
|
|
|
|
|
|
||||||||
Other assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,096
|
|
|
$
|
1,338
|
|
Other current liabilities
|
(3,866
|
)
|
|
(3,887
|
)
|
|
(613
|
)
|
|
(608
|
)
|
||||
Retirement liabilities
|
(83,334
|
)
|
|
(119,791
|
)
|
|
(73,109
|
)
|
|
(113,103
|
)
|
||||
Net amount recognized
|
$
|
(87,200
|
)
|
|
$
|
(123,678
|
)
|
|
$
|
(69,626
|
)
|
|
$
|
(112,373
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||
Amounts recognized in AOCI consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
$
|
165,093
|
|
|
$
|
178,677
|
|
|
$
|
324,068
|
|
|
$
|
360,070
|
|
|
$
|
18,169
|
|
|
$
|
21,057
|
|
Prior service cost (credit)
|
203
|
|
|
387
|
|
|
(8,482
|
)
|
|
(10,697
|
)
|
|
(38,453
|
)
|
|
(10,358
|
)
|
||||||
Total AOCI (before tax effects)
|
$
|
165,296
|
|
|
$
|
179,064
|
|
|
$
|
315,586
|
|
|
$
|
349,373
|
|
|
$
|
(20,284
|
)
|
|
$
|
10,699
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Accumulated Benefit Obligation — end of year
|
$
|
583,346
|
|
|
$
|
616,004
|
|
|
$
|
837,272
|
|
|
$
|
942,103
|
|
Information for Pension Plans with an ABO in excess of Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
587,511
|
|
|
$
|
625,479
|
|
|
$
|
609,922
|
|
|
$
|
695,552
|
|
Accumulated benefit obligation
|
583,346
|
|
|
616,004
|
|
|
586,954
|
|
|
672,389
|
|
||||
Fair value of plan assets
|
500,311
|
|
|
501,801
|
|
|
536,200
|
|
|
581,841
|
|
||||
Weighted-average assumptions used to determine obligations at December 31
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.20
|
%
|
|
3.90
|
%
|
|
3.03
|
%
|
|
2.74
|
%
|
||||
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
1.98
|
%
|
|
2.00
|
%
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Estimated Future Benefit Payments
|
|
|
|
|
|
||||||
2016
|
31,284
|
|
|
26,660
|
|
|
4,470
|
|
|||
2017
|
32,583
|
|
|
26,806
|
|
|
4,516
|
|
|||
2018
|
33,850
|
|
|
28,996
|
|
|
4,638
|
|
|||
2019
|
35,262
|
|
|
29,709
|
|
|
4,732
|
|
|||
2020
|
36,132
|
|
|
28,931
|
|
|
4,840
|
|
|||
2021 - 2025
|
187,429
|
|
|
160,179
|
|
|
23,997
|
|
|||
Contributions
|
|
|
|
|
|
||||||
Required Company Contributions in the Following Year (2016)
|
$
|
3,947
|
|
|
$
|
24,331
|
|
|
$
|
4,470
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Percentage of assets invested in:
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
|
1
|
%
|
Equities
|
41
|
%
|
|
40
|
%
|
|
27
|
%
|
|
26
|
%
|
Fixed income
|
58
|
%
|
|
59
|
%
|
|
55
|
%
|
|
62
|
%
|
Property
|
0
|
%
|
|
0
|
%
|
|
7
|
%
|
|
7
|
%
|
Alternative and other investments
|
0
|
%
|
|
0
|
%
|
|
9
|
%
|
|
4
|
%
|
|
U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2015
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
4,767
|
|
|
$
|
—
|
|
|
$
|
4,767
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Common Stock
|
37,024
|
|
|
—
|
|
|
—
|
|
|
37,024
|
|
||||
Non-U.S. Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balanced Funds
|
—
|
|
|
8,845
|
|
|
—
|
|
|
8,845
|
|
||||
Pooled Funds
|
—
|
|
|
159,800
|
|
|
—
|
|
|
159,800
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
11,070
|
|
|
—
|
|
|
11,070
|
|
||||
Mutual Funds
|
—
|
|
|
190,274
|
|
|
—
|
|
|
190,274
|
|
||||
Corporate Bonds
|
—
|
|
|
77,754
|
|
|
—
|
|
|
77,754
|
|
||||
Municipal Bonds
|
—
|
|
|
10,006
|
|
|
—
|
|
|
10,006
|
|
||||
Total
|
$
|
37,024
|
|
|
$
|
462,516
|
|
|
$
|
—
|
|
|
$
|
499,540
|
|
Receivables
|
|
|
|
|
|
|
$
|
771
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
500,311
|
|
|
U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2014
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
3,829
|
|
|
$
|
—
|
|
|
$
|
3,829
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Common Stock
|
37,278
|
|
|
—
|
|
|
—
|
|
|
37,278
|
|
||||
Non-U.S. Common Stock
|
1,635
|
|
|
—
|
|
|
—
|
|
|
1,635
|
|
||||
Balanced Funds
|
—
|
|
|
9,270
|
|
|
—
|
|
|
9,270
|
|
||||
Pooled Funds
|
—
|
|
|
154,559
|
|
|
—
|
|
|
154,559
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
10,620
|
|
|
—
|
|
|
10,620
|
|
||||
Mutual Funds
|
—
|
|
|
212,007
|
|
|
—
|
|
|
212,007
|
|
||||
Corporate Bonds
|
—
|
|
|
63,057
|
|
|
—
|
|
|
63,057
|
|
||||
Municipal Bonds
|
—
|
|
|
9,100
|
|
|
—
|
|
|
9,100
|
|
||||
Total
|
$
|
38,913
|
|
|
$
|
462,442
|
|
|
$
|
—
|
|
|
$
|
501,355
|
|
Receivables
|
|
|
|
|
|
|
$
|
446
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
501,801
|
|
|
Non-U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2015
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
13,239
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,239
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
74,306
|
|
|
17,118
|
|
|
—
|
|
|
91,424
|
|
||||
U.S. Mid Cap
|
262
|
|
|
—
|
|
|
—
|
|
|
262
|
|
||||
U.S. Small Cap
|
230
|
|
|
—
|
|
|
—
|
|
|
230
|
|
||||
Non-U.S. Large Cap
|
73,578
|
|
|
12,372
|
|
|
—
|
|
|
85,950
|
|
||||
Non-U.S. Mid Cap
|
2,175
|
|
|
—
|
|
|
—
|
|
|
2,175
|
|
||||
Non-U.S. Small Cap
|
226
|
|
|
—
|
|
|
—
|
|
|
226
|
|
||||
Emerging Markets
|
33,291
|
|
|
2,152
|
|
|
—
|
|
|
35,443
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
121,552
|
|
|
55,184
|
|
|
—
|
|
|
176,736
|
|
||||
Non-U.S. Corporate Bonds
|
56,238
|
|
|
174,626
|
|
|
—
|
|
|
230,864
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
26,132
|
|
|
—
|
|
|
26,132
|
|
||||
Non-U.S. Other Fixed Income
|
1,625
|
|
|
—
|
|
|
—
|
|
|
1,625
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
299
|
|
|
36,447
|
|
|
—
|
|
|
36,746
|
|
||||
Hedge Funds
|
—
|
|
|
—
|
|
|
17,034
|
|
|
17,034
|
|
||||
Absolute Return Funds
|
2,566
|
|
|
16,603
|
|
|
—
|
|
|
19,169
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
|
—
|
|
|
13,985
|
|
|
39,307
|
|
|
53,292
|
|
||||
Total
|
$
|
379,654
|
|
|
$
|
354,619
|
|
|
$
|
56,341
|
|
|
$
|
790,614
|
|
|
Non-U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2014
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
10,792
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,792
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
64,852
|
|
|
8,295
|
|
|
—
|
|
|
73,147
|
|
||||
Non-U.S. Large Cap
|
83,671
|
|
|
5,853
|
|
|
—
|
|
|
89,524
|
|
||||
Non-U.S. Mid Cap
|
145
|
|
|
—
|
|
|
—
|
|
|
145
|
|
||||
Non-U.S. Small Cap
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Emerging Markets
|
52,664
|
|
|
1,214
|
|
|
—
|
|
|
53,878
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
47
|
|
|
—
|
|
|
—
|
|
|
47
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
163,143
|
|
|
100,544
|
|
|
—
|
|
|
263,687
|
|
||||
Non-U.S. Corporate Bonds
|
62,630
|
|
|
186,837
|
|
|
—
|
|
|
249,467
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
16,375
|
|
|
—
|
|
|
16,375
|
|
||||
Non-U.S. Other Fixed Income
|
1,409
|
|
|
—
|
|
|
—
|
|
|
1,409
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
316
|
|
|
—
|
|
|
—
|
|
|
316
|
|
||||
Hedge Funds
|
—
|
|
|
—
|
|
|
14,775
|
|
|
14,775
|
|
||||
Other
|
904
|
|
|
—
|
|
|
—
|
|
|
904
|
|
||||
Absolute Return Funds
|
—
|
|
|
17,135
|
|
|
—
|
|
|
17,135
|
|
||||
Private Equity Funds
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
(1)
|
—
|
|
|
11,697
|
|
|
49,556
|
|
|
61,253
|
|
||||
Total
|
$
|
440,606
|
|
|
$
|
347,950
|
|
|
$
|
64,337
|
|
|
$
|
852,893
|
|
|
Non-U.S. Plans
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Real
Estate
|
|
Private
Equity
|
|
Hedge
Funds
|
|
Total
|
||||||||
Ending balance as of December 31, 2014
|
$
|
49,556
|
|
|
$
|
6
|
|
|
$
|
14,775
|
|
|
$
|
64,337
|
|
Actual return on plan assets
|
(10,249
|
)
|
|
(6
|
)
|
|
2,259
|
|
|
(7,996
|
)
|
||||
Ending balance as of December 31, 2015
|
$
|
39,307
|
|
|
$
|
—
|
|
|
$
|
17,034
|
|
|
$
|
56,341
|
|
|
Expense
|
|
Liability
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Discount rate
|
3.90
|
%
|
|
4.80
|
%
|
|
4.20
|
%
|
|
3.90
|
%
|
Current medical cost trend rate
|
5.80
|
%
|
|
6.50
|
%
|
|
7.15
|
%
|
|
5.80
|
%
|
Ultimate medical cost trend rate
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
Medical cost trend rate decreases to ultimate rate in year
|
2023
|
|
|
2021
|
|
|
2023
|
|
|
2023
|
|
|
Sensitivity of Disclosures to Changes in Selected Assumptions
|
||||||||||||||
|
25 BP Decrease in Discount
Rate
|
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Long-Term Rate of
Return
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Change in
PBO
|
|
Change in
ABO
|
|
Change in
pension expense
|
|
Change in pension
expense
|
||||||||
U.S. Pension Plans
|
$
|
17,519
|
|
|
$
|
17,359
|
|
|
$
|
(5
|
)
|
|
$
|
1,186
|
|
Non-U.S. Pension Plans
|
39,727
|
|
|
37,661
|
|
|
2,478
|
|
|
1,963
|
|
||||
Postretirement Benefit Plan
|
N/A
|
|
|
2,376
|
|
|
85
|
|
|
N/A
|
|
•
|
Level 1 — Quoted prices for
identical
instruments in active markets.
|
•
|
Level 2 — Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
•
|
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable
.
|
|
2015
|
|
2014
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
(1)
|
$
|
181,988
|
|
|
$
|
181,988
|
|
|
$
|
478,573
|
|
|
$
|
478,573
|
|
Credit facilities and bank overdrafts
(2)
|
142,105
|
|
|
142,105
|
|
|
12,335
|
|
|
12,335
|
|
||||
Long-term debt:
(3)
|
|
|
|
|
|
|
|
||||||||
Senior notes — 2006
|
125,000
|
|
|
127,717
|
|
|
125,000
|
|
|
133,137
|
|
||||
Senior notes — 2007
|
500,000
|
|
|
563,855
|
|
|
500,000
|
|
|
587,650
|
|
||||
Senior notes — 2013
|
299,809
|
|
|
290,830
|
|
|
299,782
|
|
|
296,290
|
|
(1)
|
The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.
|
(2)
|
The carrying amount of our credit facilities and bank overdrafts approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments.
|
(3)
|
The fair value of our long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on our own credit risk.
|
(DOLLARS IN THOUSANDS)
|
December 31, 2015
|
|
December 31, 2014
|
||||
Forward currency contracts
|
$
|
256,200
|
|
|
$
|
191,150
|
|
Interest rate swaps
|
$
|
775,000
|
|
|
$
|
425,000
|
|
|
December 31, 2015
|
||||||||||
|
Fair Value of
Derivatives
Designated as
Hedging
Instruments
|
|
Fair Value of
Derivatives Not
Designated as
Hedging
Instruments
|
|
Total Fair
Value
|
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
6,560
|
|
|
$
|
3,700
|
|
|
$
|
10,260
|
|
Interest rate swaps
|
1,210
|
|
|
—
|
|
|
1,210
|
|
|||
|
$
|
7,770
|
|
|
$
|
3,700
|
|
|
$
|
11,470
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
2,106
|
|
|
$
|
3,022
|
|
|
$
|
5,128
|
|
|
|
|
|
|
|
||||||
|
December 31, 2014
|
||||||||||
|
Fair Value of
Derivatives
Designated as
Hedging
Instruments
|
|
Fair Value of
Derivatives Not
Designated as
Hedging
Instruments
|
|
Total Fair
Value
|
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
16,637
|
|
|
$
|
4,398
|
|
|
$
|
21,035
|
|
Interest rate swaps
|
683
|
|
|
—
|
|
|
683
|
|
|||
|
$
|
17,320
|
|
|
$
|
4,398
|
|
|
$
|
21,718
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
6
|
|
|
$
|
1,055
|
|
|
$
|
1,061
|
|
(a)
|
Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheet.
|
(b)
|
Derivative liabilities are recorded as Other current liabilities in the Consolidated Balance Sheet.
|
|
Amount of Gain or
(Loss) Recognized in
OCI on Derivative
(Effective Portion)
|
|
Location of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
|
Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
||||||||||||
|
For the years ended
December 31,
|
|
|
For the years ended
December 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Forward currency contract
|
(3,244
|
)
|
|
16,109
|
|
|
Cost of goods sold
|
|
16,250
|
|
|
(3,675
|
)
|
||||
Interest rate swaps
(2)
|
274
|
|
|
274
|
|
|
Interest expense
|
|
(274
|
)
|
|
(274
|
)
|
||||
Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Forward currency contract
|
5,231
|
|
|
7,415
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
2,261
|
|
|
$
|
23,798
|
|
|
|
|
$
|
15,976
|
|
|
$
|
(3,949
|
)
|
(1)
|
Ten year swap executed in 2003, matured in January 2013.
|
(2)
|
Interest rate swaps were entered into as pre-issuance hedges for the
$300 million
bond offering.
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2014
|
$
|
(173,342
|
)
|
|
$
|
12,371
|
|
|
$
|
(379,459
|
)
|
|
$
|
(540,430
|
)
|
OCI before reclassifications
|
(124,156
|
)
|
|
13,006
|
|
|
33,410
|
|
|
(77,740
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(15,976
|
)
|
|
20,707
|
|
|
4,731
|
|
||||
Net current period other comprehensive income (loss)
|
(124,156
|
)
|
|
(2,970
|
)
|
|
54,117
|
|
|
(73,009
|
)
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2015
|
$
|
(297,498
|
)
|
|
$
|
9,401
|
|
|
$
|
(325,342
|
)
|
|
$
|
(613,439
|
)
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2013
|
$
|
(104,278
|
)
|
|
$
|
(4,012
|
)
|
|
$
|
(284,421
|
)
|
|
$
|
(392,711
|
)
|
OCI before reclassifications
|
(69,064
|
)
|
|
12,434
|
|
|
(111,915
|
)
|
|
(168,545
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
3,949
|
|
|
16,877
|
|
|
20,826
|
|
||||
Net current period other comprehensive income (loss)
|
(69,064
|
)
|
|
16,383
|
|
|
(95,038
|
)
|
|
(147,719
|
)
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2014
|
$
|
(173,342
|
)
|
|
$
|
12,371
|
|
|
$
|
(379,459
|
)
|
|
$
|
(540,430
|
)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Affected Line Item in the
Consolidated Statement of Comprehensive Income |
||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
||||
(Losses) gains on derivatives qualifying as hedges
|
|
|
|
|
|
||||
Foreign currency contracts
|
18,571
|
|
|
(4,426
|
)
|
|
Cost of goods sold
|
||
Interest rate swaps
|
(274
|
)
|
|
(274
|
)
|
|
Interest expense
|
||
|
(2,321
|
)
|
|
751
|
|
|
Provision for income taxes
|
||
|
$
|
15,976
|
|
|
$
|
(3,949
|
)
|
|
Total, net of income taxes
|
(Losses) gains on pension and postretirement liability adjustments
|
|
|
|
|
|
||||
Settlements / Curtailments
|
$
|
—
|
|
|
$
|
(43
|
)
|
|
(a)
|
Prior service cost
|
6,389
|
|
|
(63
|
)
|
|
(a)
|
||
Actuarial losses
|
(36,167
|
)
|
|
(28,219
|
)
|
|
(a)
|
||
|
9,071
|
|
|
11,448
|
|
|
Provision for income taxes
|
||
|
$
|
(20,707
|
)
|
|
$
|
(16,877
|
)
|
|
Total, net of income taxes
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
3(i)
|
|
|
Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 10(g) to Registrant’s Report on Form 10-Q filed on August 12, 2002.
|
|
|
|
|
3(ii)
|
|
|
By-laws of the Registrant, effective as of February 6, 2014, incorporated by reference to Exhibit 3(ii) to Registrant’s Report on Form 8-K filed on December 17, 2015.
|
|
|
|
|
4.1
|
|
|
Note Purchase Agreement, dated as of July 12, 2006, by and among International Flavors & Fragrances Inc. and the various purchasers named therein, incorporated by reference to Exhibit 4.7 to Registrant’s Report on Form 8-K filed on July 13, 2006.
|
|
|
|
|
4.2
|
|
|
Form of Series A, Series B, Series C and Series D Senior Notes incorporated by reference to Exhibit 4.8 to Registrant’s Report on Form 8-K filed on July 13, 2006.
|
|
|
|
|
4.3
|
|
|
Note Purchase Agreement, dated as of September 27, 2007, by and among International Flavors & Fragrances Inc. and the various purchasers named therein, incorporated by reference to Exhibit 4.7 to Registrant’s Report on Form 8-K filed on October 1, 2007.
|
|
|
|
|
4.4
|
|
|
Form of Series A, Series B, Series C and Series D Senior Notes incorporated by reference to Exhibit 4.8 of Registrant’s Report on Form 8-K filed on October 1, 2007.
|
|
|
|
|
*10.1
|
|
|
Letter Agreement between International Flavors & Fragrances Inc. and Andreas Fibig, dated May 26, 2014, incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 8-K filed on May 28, 2014.
|
|
|
|
|
*10.2
|
|
|
Supplemental Retirement Plan, adopted by the Registrant’s Board of Directors on October 29, 1986 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.5 to Registrant’s Report on Form 10-K filed on February 27, 2008.
|
|
|
|
|
*10.3
|
|
|
2000 Stock Award and Incentive Plan, adopted by the Registrant’s Board of Directors on March 9, 2000 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.6 to Registrant’s Report on Form 10-K filed on February 27, 2008.
|
|
|
|
|
*10.4
|
|
|
2015 Stock Award and Incentive Plan, as Amended and Restated as of February 6, 2014, incorporated by reference to Annex 1 of the Registrant's definitive proxy statement on Schedule 14A Filed with the SEC on March 18, 2015.
|
|
|
|
|
*10.5
|
|
|
2000 Supplemental Stock Award Plan, adopted by the Registrant’s Board of Directors on November 14, 2000 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-K filed on February 27, 2008.
|
|
|
|
|
*10.6
|
|
|
Form of Non-Employee Director’s Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-Q filed on October 31, 2007.
|
|
|
|
|
*10.7
|
|
|
Form of U.S. Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.5 to Registrant’s Report on Form 10-Q filed on October 31, 2007.
|
Exhibit
Number
|
|
Description
|
|
|
|
*10.8
|
|
Form of U.S. Stock Settled Appreciation Rights Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.6 to Registrant’s Report on Form 10-Q filed on October 31, 2007.
|
|
|
|
*10.9
|
|
Form of Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 10-Q filed on August 5, 2009.
|
|
|
|
*10.10
|
|
Form of Purchased Restricted Stock Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on August 5, 2009.
|
|
|
|
*10.11
|
|
Form of Employee Stock Option Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on November 9, 2004.
|
|
|
|
*10.12
|
|
Form of International Flavors & Fragrances Inc. Stock Option Agreement under 2000 Stock Option Plan for Non-Employee Directors, incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 10-Q filed on November 9, 2004.
|
|
|
|
*10.13
|
|
Amended and Restated Executive Severance Policy, as Amended through and including March 11, 2015, incorporated by reference to Exhibit 10.2 to Registrant's Report on Form 10-Q Filed on May 12, 2015.
|
|
|
|
*10.14
|
|
Director Charitable Contribution Program, adopted by the Board of Directors on December 8, 2009, incorporated by reference to Exhibit 10.38 to Registrant’s Report on Form 10-K filed on February 25, 2010.
|
|
|
|
*10.15
|
|
Form of Director/Officer Indemnification Agreement incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed on July 28, 2008.
|
|
|
|
*10.16
|
|
Credit Agreement, dated as of November 9, 2011, Amended and Restated as of April 4, 2014, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Luxembourg) S.à r.l., International Flavors & Fragrances (Nederland) Holding B.V., International Flavors & Fragrances I.F.F. (Nederland) B.V., IFF Worldwide (Gibraltar) Limited and IFF Aroma Esans Sanayi Ve Ticaret Anonim Sirketi, as borrowers, the banks, financial institutions and other institutional lenders party thereto, and Citibank, N.A. as administrative agent, incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed on April 8, 2014.
|
|
|
|
*10.17
|
|
Amendment No. 1 to the Credit Agreement, dated as of June 2, 2014, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Luxembourg) S.à.r.l., International Flavors & Fragrances (Nederland) Holding B.V., International Flavors & Fragrances I.F.F. (Nederland) B.V., IFF Worldwide (Gibraltar) Limited and IFF Aroma Esans Sanayi Ve Ticaret Anonim Sirketi, the various financial institutions as are parties to the Credit Agreement, and Citibank, N.A. as administrative agent, incorporated by reference to Exhibit 10.3 to Registrant's Report on Form 10-Q filed on August 5, 2014.
|
|
|
|
*10.18
|
|
Form of Executive Death Benefit Plan Agreement incorporated by reference to Exhibit 10.27 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
*10.19
|
|
Deferred Compensation Plan, as amended and restated December 12, 2011 incorporated by reference to Exhibit 10.28 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
*10.20
|
|
Form of U.S. Stock Settled Appreciation Rights Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.29 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
*10.21
|
|
|
Form of Restricted Stock Units Award Agreement under International Flavors & Fragrances Inc. 2015 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.36 to Registrant’s Report on Form 10-Q filed on May 12, 2015.
|
|
|
|
|
*10.22
|
|
|
Form of Purchased Restricted Stock Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.31 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.23
|
|
|
Form of Non-Employee Director’s Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2015 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-K filed on May 12, 2015.
|
|
|
|
|
*10.24
|
|
|
Form of Annual Incentive Plan Award Agreement under International Flavors & Fragrances Inc. 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.3 to Registrant's Report on Form 10-Q Filed on May 12, 2015.
|
|
|
|
|
*10.25
|
|
|
Form of Long-Term Incentive Plan Award Agreement under International Flavors & Fragrances Inc. 2015 Stock Award and Incentive Plan.
|
|
|
|
|
*10.26
|
|
|
Restricted Stock Units Award Agreement, dated as of June 13, 2014, between International Flavors and Fragrances Inc. and Nicolas Mirzayantz, incorporated by reference to Exhibit 10.5 to Registrant's Report on Form 10-Q Filed on August 5, 2014.
|
|
|
|
|
*10.27
|
|
|
Form of Equity Choice Program Award Agreement under International Flavors & Fragrances Inc. 2015 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant's Report on Form 10-Q Filed on November 9, 2015.
|
|
|
|
|
21
|
|
|
List of Principal Subsidiaries.
|
|
|
|
|
23
|
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
|
|
|
31.1
|
|
|
Certification of Andreas Fibig pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
|
Certification of Alison A. Cornell pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32
|
|
|
Certification of Andreas Fibig and Alison A. Cornell pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extensions Schema
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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*
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Management contract or compensatory plan or arrangement
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
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By:
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/s/ Alison A. Cornell
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Name:
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Alison A. Cornell
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Title:
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Executive Vice President and Chief Financial Officer
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Signature
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Title
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Date
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/s/ Andreas Fibig
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Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)
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March 1, 2016
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Andreas Fibig
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/s/ Alison A. Cornell
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Executive Vice President and Chief Financial Officer
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March 1, 2016
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Alison A. Cornell
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/s/ Richard A. O'Leary
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Senior Vice President, Controller and Chief Accounting Officer
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March 1, 2016
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Richard A. O'Leary
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/s/ Marcello V. Bottoli
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Director
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March 1, 2016
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Marcello V. Bottoli
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/s/ Linda B. Buck
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Director
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March 1, 2016
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Linda B. Buck
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/s/ Michael Ducker
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Director
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March 1, 2016
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Michael Ducker
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/s/ David R. Epstein
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Director
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March 1, 2016
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David R. Epstein
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/s/ Roger W. Ferguson, Jr.
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Director
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March 1, 2016
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Roger W. Ferguson, Jr.
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/s/ John F. Ferraro
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Director
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March 1, 2016
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John F. Ferraro
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/s/ Christina Gold
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Director
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March 1, 2016
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Christina Gold
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/s/ Henry W. Howell, Jr.
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Director
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March 1, 2016
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Henry W. Howell, Jr.
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/s/ Katherine M. Hudson
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Director
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March 1, 2016
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Katherine M. Hudson
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/s/ Dale F. Morrison
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Director
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March 1, 2016
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Dale F. Morrison
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For the Year Ended December 31, 2015
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||||||||||||||||||
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Balance at
beginning
of period
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Additions
(deductions)
charged to
costs and
expenses
|
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Accounts
written
off
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Translation
adjustments
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Balance at
end of
period
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||||||||||
Allowance for doubtful accounts
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$
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9,147
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$
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590
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$
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60
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$
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(1,568
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)
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$
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8,229
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Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
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355,568
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16,445
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(1)
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—
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(32,618
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)
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339,395
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|||||
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||||||||||
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For the Year Ended December 31, 2014
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||||||||||||||||||
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Balance at
beginning
of period
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Additions
(deductions)
charged to
costs and
expenses
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Accounts
written
off
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Translation
adjustments
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Balance at
end of
period
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||||||||||
Allowance for doubtful accounts
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$
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10,493
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$
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222
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$
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(554
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)
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$
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(1,014
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)
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$
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9,147
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Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
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503,990
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(92,204
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)
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(2)
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—
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(56,218
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)
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355,568
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|||||
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||||||||||
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For the Year Ended December 31, 2013
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||||||||||||||||||
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Balance at
beginning
of period
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Additions
(deductions)
charged to
costs and
expenses
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Accounts
written
off
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Translation
adjustments
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Balance at
end of
period
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||||||||||
Allowance for doubtful accounts
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$
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9,293
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$
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1,984
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$
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(1,059
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)
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$
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275
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$
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10,493
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Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
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450,733
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38,360
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(3)
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—
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14,897
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503,990
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Participant Information
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LTIP Award Information
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||||
Base Salary
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LTIP Target
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Performance Metrics
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Price of a share of Common Stock for Determining Number of shares of Common Stock at Target*
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Performance Cycle
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Payment of LTIP Award
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[Insert Base Salary]
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[Target Amount], representing [x%] of Base Salary
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Actual LTIP Award payouts are based on achievement of the results against the Performance Metrics and Weightings below.
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[INSERT SHARE PRICE]
*20-day trailing average price of a share of Common Stock as of the first trading day of the Performance Cycle
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[January 1, 201X]-[December 31, 201X]
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Payments are made in the year following the last day of the Performance Cycle [XXX] at the discretion of the Committee. The cash portion will be paid in the applicable local currency.
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Performance Segments; Performance Metrics; LTIP Award Amounts at Target
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Performance
Segment
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Proration**
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LTIP Award Amounts at Target
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Performance Metrics
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||
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Cash Target
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Shares of Common Stock Target
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EP***
Metric
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TSR***
Metric
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Year 1: 201X
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100%
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$[X]
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[# of shares of Common Stock]
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100%
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0%
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Year 2: 201X
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100%
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$[X]
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[# of shares of Common Stock]
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100%
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0%
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Year 3: 201X
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100%
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$[X]
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[# of shares of Common Stock]
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100%
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0%
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Cumulative
201X-201X
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100%
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$[X]
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[# of shares of Common Stock]
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0%
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100%
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Total Performance
Cycle
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$[X]
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[# of shares of Common Stock]
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1.
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Amount of LTIP Award
. As of the Date of Grant, the Participant shall be eligible to receive an LTIP Award in the amount of the LTIP Target set forth on the first page of the LTIP Award Agreement, as such amount may be adjusted as described in Section 5 below.
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2.
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Eligibility for LTIP Award
. A Participant’s eligibility for an LTIP Award in one Performance Cycle does not guarantee eligibility of the Participant for another LTIP Award in a subsequent Performance Cycle.
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3.
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Payment of the LTIP Award
. The LTIP Award provides the Participant with an opportunity to receive a single LTIP Award payout, comprising two separate payments, one in cash and one in shares of Common Stock (collectively, the “
LTIP Award Payment
”) if the Company achieves one or more satisfactory levels of performance (each a “
Performance Achievement Level
”) in respect of one or more metrics (each a “
Performance Metric
”) specified by the Committee, as provided hereunder. Performance Metrics must be met over discrete periods of time (each a “
Performance Segment
”) within or over a multi-year performance period (a “
Performance Cycle
”), as specified in the LTIP Award Agreement. Any LTIP Award Payment will be made in accordance with the attached LTIP Award Agreement. All LTIP Awards payable in cash will be paid in the applicable local currency. Except as provided in Section[s] 9 [and 10] below, a Participant must remain Employed by the Company continuously from the Date of Grant of the LTIP Award through the date the LTIP Award Payment is made. Accordingly, there is no partial payout for LTIP Awards, except as provided in Section[s] 9 [and 10] below.
1
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4.
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LTIP Target
. The attached LTIP Award Agreement specifies the Participant’s Long-Term Incentive Plan Target Award (the “
LTIP Target
”). The LTIP Target provides the Participant with an opportunity to receive an LTIP Award Payment in an amount equal to the LTIP Target. However, the actual LTIP Award Payment may be more or less than the LTIP Target, depending on the performance of the Company during the Performance Segments, as described further below and in Section 5:
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a.
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The LTIP Target is divided among (i) three annual Performance Segments based on Economic Profit (as defined below) which are each weighted 12.5% when determining the LTIP Award Payment and (ii) a Cumulative Performance Segment based on TSR (as defined below) for the three-year Cumulative Performance Segment, which is weighted 62.5% when determining the LTIP Award Payment; and
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1
NTD: IFF to include bracketed language for Participants who are level 7.
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b.
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The LTIP Target for each Performance Metric in a Performance Segment is then divided equally between an opportunity to receive an LTIP Award Payment in the form of cash and an opportunity to receive an LTIP Award Payment in the form of shares of Common Stock.
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5.
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Achievement of Performance Achievement Levels.
The Committee shall specify the Performance Achievement Levels for each Performance Segment that will provide an LTIP Award Payment at LTIP Target. Specific values for Threshold, Target and Maximum (each, as described below) Performance Achievement Levels shall be set for each Performance Segment at the beginning of each Performance Segment by the Company when its budgets and other incentive targets are approved the Company’s Board of Directors. If 100% of the Performance Achievement Levels are achieved for a Performance Segment (the “
Target
”), the LTIP Award shall be equal to the LTIP Target for such Performance Segment; if the “
Threshold
” amount of the Performance Achievement Levels are achieved for the Performance Segment, the LTIP Award for such Performance Segment shall be equal to 25% of the LTIP Target for such Performance Segment; and if the “
Maximum
” amount of the Performance Achievement Levels are achieved for a Performance Segment, the LTIP Award for such Performance Segment shall be equal to 200% of the LTIP Target for such Performance Segment. If less than the Threshold is met, the LTIP Award shall be $0. If in a Performance Segment the actual performance is above the Threshold, but below the Target, or above the Target but below the Maximum, the LTIP Award Payment for such Performance Segment shall be adjusted on a pro rata basis by the actual Performance Achievement Levels. In no event shall the LTIP Award Payment for any Performance Segment be more than 200% of the LTIP Target for such Performance Segment.
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6.
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Performance Metrics
.
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a.
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The Committee has established Internal Economic Profit (“
EP
”) and External Total Shareholder Return (“
TSR
”) against the S&P 500 as the financial metrics for measuring Company performance for the Performance Segments. EP measures operating profitability after considering (i) the Company’s operating profit, (ii) the Company’s income taxes and (iii) a charge for the capital employed in the business. TSR is calculated by measuring the change in the market price of a share of Common Stock plus dividends paid (assuming the dividends are reinvested) for the Company and the S&P 500 companies over the Cumulative Performance Segment. The market price for purposes of calculating the TSR of the Company and the S&P 500 for the Cumulative Performance Segment is determined based on the average closing price per share of Common Stock over the period of 20 consecutive trading days preceding the last day of the Cumulative Performance Segment.
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b.
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The Performance Achievement Level for a Performance Segment that is a calendar year shall be set by the Committee on or before March 31 of each such year. The Performance Achievement Level for a Performance Segment that is greater than a calendar year shall be set by the Committee on or before March 31 of the first calendar year for the Performance Segment.
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c.
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Notwithstanding the attached LTIP Award Agreement, (i) for a Performance Segment that is a calendar year, the Committee may change the Performance Metrics for the Performance Segment on or before March 31 of such year; and (ii) for a Performance Segment that is greater than a calendar year, the Committee may change the Performance Metrics for the Performance Segment on or before March 31 of the first calendar year of the Performance Segment.
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7.
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Notional Account Credits
. The portion of the LTIP Award attributable to the achievement of a Performance Metric at or above the Threshold during a Performance Segment prior to the LTIP Award Payment date will be credited to a notional bookkeeping account maintained by the Company until payout of the LTIP Award as provided herein. Shares of Common Stock do not have voting rights until payout. Shares of Common Stock do not pay dividends until vested.
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8.
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Mid-Year Entrants
. For Participants entering the LTIP after January 1 of a Performance Segment, LTIP Awards shall be pro-rated based on the number of days in the Performance Segment that the Participant is Employed by the Company as compared to the number of days in the Performance Segment.
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9.
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Termination of Employment or Leave of Absence
. A Participant’s rights under the LTIP Award following termination of Employment or leave of absence shall be determined in accordance with the following provisions.
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a.
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Involuntary and Good Reason Termination: (i) if the Participant is involuntarily terminated without Cause (as defined in the Plan) by the Company, or, if applicable, the Participant terminates for Good Reason (as defined in the Plan), the Participant’s LTIP Award will be calculated as provided above and pro-rated based on the number of days in the Performance Segment through the Participant’s separation from service (as defined under Section 409A of the Code), as compared to the total number of days in the Performance Segment, and payment will be made on the normally scheduled payout date for the LTIP Award; and (ii) if the Participant is terminated for Cause (as defined in Plan) at any time prior to the scheduled payment date for an LTIP Award, the Participant will not be entitled to any portion of an LTIP Award.
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b.
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Voluntary Termination (if applicable, other than for Good Reason): If the Participant voluntarily terminates Employment at any time prior to the scheduled payment date for an LTIP Award, the Participant will not be entitled to receive any portion of an LTIP Award.
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c.
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Early Retirement, Normal Retirement, Death and Disability: LTIP Awards, if any, are pro-rated based on the number of days in the Performance Segment through the separation from service due to Early Retirement, Normal Retirement, death or Disability as compared to the total number of days in the Performance Segment and payment is made on the normally scheduled payout date for the LTIP Award.
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d.
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Leave of Absence: If a Participant is not in active Employment at any time prior to the scheduled payment date for an LTIP Award as a result of a paid or unpaid leave of absence, the amount of any LTIP Award may be further adjusted, subject to local legal requirements and applicable Company policies that govern leaves of absence.
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10.
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Change in Control.
[Except as otherwise provided below]
2
, in the event the Company undergoes a “Change in Control” (as defined in the Plan), LTIP Awards shall be treated as provided for in Section 11 of the Plan or the ESP, if applicable.
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a.
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[In the event the Participant’s Employment with the Company or a successor company is terminated within 2 years following a Change in Control by the Company (or successor company) without Cause and the Participant is designated by the Company as grade level 7 as of the date of the Change in Control,
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i.
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For each Performance Segment that ends prior to the date of the Participant’s separation from service, the Participant shall receive an LTIP Award Payment equal to the LTIP Award Payment, if any, the Participant would have been entitled to receive for such Performance Segment had the Participant not separated from service, determined in accordance with Sections 5 and 6 of this LTIP Award Agreement; and
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ii.
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For each Performance Segment in which the Participant’s separation from service occurs, the Participant shall receive an LTIP Award Payment equal to the product of (x) the Participant’s LTIP Target for the Performance Segment during which the Participant’s separation from service occurred and (y) a fraction, the numerator of which is the number of days during the Performance Segment preceding the date of the Participant’s separation from service and the denominator of which is the
total number of days in the Performance Segment,
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11.
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Clawback and Recoupment Provisions
. Notwithstanding anything herein to the contrary, both cash payments and shares of Common Stock paid or payable in connection with an LTIP Award shall be subject to the clawback, recoupment and forfeiture provisions of Section 32 of the Plan and Section 9 of the ESP, if applicable. By acknowledging the LTIP Award Agreement, the Participant acknowledges that any and all LTIP Awards previously granted to the Participant prior to the Grant Date, and any other cash or shares of Common Stock provided to the Participant following the Grant Date under the LTIP or otherwise under the Plan, are subject to the provisions of Section 32 of the Plan and Section 9 of the ESP, as applicable.
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12.
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Limits on Transfers of Awards
. Except as provided by the Committee, no LTIP Award and no right under any LTIP Award, shall be assignable, alienable, saleable, or transferable by a Participant other than by will or by the laws of descent and distribution in accordance with Section 23 of the Plan.
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13.
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Administration
.
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a.
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Administration
. The Board has delegated administrative authority to the Committee and the LTIP shall be administered by the Committee or a subset of the Committee that satisfies the requirements of Section 162(m) of the Code with respect to any Performance-Based Award.
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2
NTD: Include the bracketed language and (a) for level 7 Participants.
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b.
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Powers and Duties
. The Committee shall have sole discretion and authority to make any and all determinations necessary or advisable for administration of the LTIP and may adopt, amend or revoke any rule or regulation established for the proper administration of the LTIP. The Committee shall have the ability to modify the LTIP provisions, to the extent necessary, or delegate such authority, to accommodate any changes in law or regulations in jurisdictions in which Participants will receive LTIP Awards. The Committee will review and approve the Performance Metrics established at the beginning of each Plan Year and review and approve LTIP Award Payments. All interpretations, decisions, or determinations made by the Committee pursuant to the LTIP shall be final and conclusive.
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14.
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Amendment; Termination of the LTIP.
The Committee has the right to revise, modify, or terminate the LTIP in whole or in part at any time or for any reason, and the right to modify any LTIP Award amount in accordance with Section 31 of the Plan.
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15.
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Tax Liability and Withholding
. The Participant shall be responsible for any tax liability that may arise as a result of the payments contemplated by an LTIP Award or these LTIP Terms and Conditions in accordance with Section 20 of the Plan. The Participant acknowledges the Company is authorized to withhold taxes due, or potentially payable in connection with any LTIP Award Payment in accordance with Section 20 of the Plan. Further, the Participant agrees to any deduction or setoff by the Company as provided under Section 26 of the Plan.
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1.
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Severability; Survival of Terms
. Should any provision of an LTIP Award or these LTIP Terms and Conditions be held by a court of competent jurisdiction to be unenforceable, such holding shall not affect the validity of the remainder of the LTIP Award or these LTIP Terms and Conditions. These LTIP Terms and Conditions shall apply to and bind the Participant and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.
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2.
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Entire Agreement
. These LTIP Terms and Conditions, the LTIP Award Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.
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3.
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Non U.S. Residents
. Rights and restrictions for Participants residing in foreign countries may differ and shall be based on applicable foreign law and will be governed by Section 33 of the Plan.
|
4.
|
Electronic Delivery
. The Company may, in its sole discretion, deliver any documents related to an LTIP Award by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
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5.
|
Governing Law
. These LTIP Terms and Conditions and the attached LTIP Award Agreement shall be governed by and construed according to the laws of the State of New York and of the United States without regard to principles of conflict of law.
|
6.
|
Consent for Data Transfer
. By accepting this LTIP Award Agreement, the Participant voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described herein, including for the purpose of managing and administering the Plan, certain personal information, including name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, and details of all options or any other entitlement to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in Participant’s favor (“
Data
”). The Company and/or its affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Plan and may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. The Participant authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Common Stock on Participant's behalf to a broker or other third party with whom Participant may elect to deposit any shares of Common Stock acquired pursuant to the Plan. A Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company; however, withdrawing consent may affect Participant's ability to participate in the Plan.
|
7.
|
Notices
. Any notice required or permitted to be given under these LTIP Terms and Conditions or the LTIP Award Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:
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Name of Entity
|
Jurisdiction
|
International Flavors & Fragrances S.R.L.
|
Argentina
|
Bush Boake Allen Australia Pty Ltd
|
Australia
|
IFF Australia Holdings Pty Ltd
|
Australia
|
International Flavours & Fragrances (Australia) Pty Ltd
|
Australia
|
Lucas Meyer Cosmetics Australia Pty Ltd
|
Australia
|
Southern Cross Botanicals Pty Ltd
|
Australia
|
Alva Insurance Ltd
|
Bermuda
|
IFF Essências e Fragrâncias Ltda.
|
Brazil
|
Bush Boake Allen do Brasil Indústria e Comércio Ltda.
|
Brazil
|
International Flavors & Fragrances (Canada) Ltd.
|
Canada
|
Lucas Meyer Cosmetics Canada Inc.
|
Canada
|
Bush Boake Allen Chile S.A.
|
Chile
|
IFF Sabores y Fragancias de Chile Ltda.
|
Chile
|
International Flavors & Fragrances I.F.F. (Chile) Limitada
|
Chile
|
International Flavors & Fragrances (Hangzhou) Co., Ltd.
1
|
China
|
IFF Flavors & Fragrances (Hangzhou) Trading Co., Ltd.
|
China
|
International Flavors & Fragrances (Zhejiang) Co., Ltd.
|
China
|
International Flavors & Fragrances (China) Ltd.
|
China
|
Sabores y Fragancias S.A.
|
Colombia
|
MISR Company for Aromatic products (S.A.E.)
|
Egypt
|
A. Boake, Roberts And Company (Holding), Limited
|
England
|
International Flavours & Fragrances (CIL) Limited
|
England
|
Bush Boake Allen Enterprises Limited
|
England
|
Bush Boake Allen Limited
|
England
|
Bush Boake Allen (Pension Trustees) Limited
|
England
|
Bush Boake Allen Pension Investments Limited
|
England
|
Bush Boake Allen Holdings (U.K.) Limited
|
England
|
IFF Augusta Limited
|
England
|
IFF Augusta II Limited
|
England
|
International Flavours & Fragrances (GB) Holdings Limited
|
England
|
International Flavours & Fragrances I.F.F. (Great Britain) Limited
|
England
|
Southern Cross Botanicals UK Limited
|
England
|
International Flavors & Fragrances - I.F.F. (France)
|
France
|
International Flavors & Fragrances France Holding I
2
|
France
|
International Flavors & Fragrances France Holding II
|
France
|
International Flavors & Fragrances France Holding III
|
France
|
Lucas Meyer Cosmetics
|
France
|
Institut Européen de Biologie Cellulaire
|
France
|
International Flavors & Fragrances IFF (Deutschland) GmbH
|
Germany
|
IFF Worldwide (Gibraltar) Limited
|
Gibraltar
|
IFF (Gibraltar) Holdings
|
Gibraltar
|
International Flavors & Fragrances (Hong Kong) Limited
|
Hong Kong
|
Essence Scientific Research Private Limited
|
India
|
Fragrance Holdings Private Limited
|
India
|
International Flavours & Fragrances India Private Limited
3
|
India
|
P.T. Essence Indonesia
|
Indonesia
|
IFF Capital Services
|
Ireland
|
IFF Financial Services
|
Ireland
|
Irish Flavours and Fragrances Limited
|
Ireland
|
Aromatics Holdings Limited
|
Ireland
|
International Flavors & Fragrances Irish Acquisition Company Limited
|
Ireland
|
Aromor Flavors and Fragrances Ltd.
|
Israel
|
BKF Vision Ltd
|
Israel
|
K-Vision Consulting and Investments Ltd
|
Israel
|
M.P. Equity Holdings Ltd
|
Israel
|
International Flavors and Fragrances I.F.F. (Israel) Ltd.
|
Israel
|
International Flavors e Fragrances IFF (Italia) S.r.l.
|
Italy
|
International Flavors & Fragrances (Japan) Ltd.
|
Japan
|
IFF (Korea) Inc.
|
Korea
|
IFF (Gibraltar) Holdings (Luxembourg) S.C.S.
|
Luxembourg
|
International Flavors & Fragrances (Luxembourg) S.à r.l.
|
Luxembourg
|
International Flavors & Fragrances Ardenne S.à r.l.
|
Luxembourg
|
International Flavours & Fragrances (Mauritius) Ltd
|
Mauritius
|
Bush Boake Allen Controladora, S.A. de C.V.
|
Mexico
|
IFF Mexico Manufactura, S.A. de C.V.
|
Mexico
|
International Flavors & Fragrances (Mexico), S. de R.L. de C.V.
|
Mexico
|
Bush Boake Allen Benelux B.V.
|
Netherlands
|
International Flavors & Fragrances (Nederland) Holding B.V.
|
Netherlands
|
International Flavors & Fragrances I.F.F. (Nederland) B.V.
|
Netherlands
|
IFF Luxar C.V.
|
Netherlands
|
International Flavours & Fragrances (NZ) Limited
|
New Zealand
|
Bush Boake Allen (New Zealand) Limited
|
New Zealand
|
International Flavors & Fragrances (Philippines), Inc.
|
Philippines
|
International Flavors & Fragrances (Poland) Sp. z o.o.
|
Poland
|
International Flavors & Fragrances (Greater Asia) Pte. Ltd
|
Singapore
|
International Flavors & Fragrances (Asia Pacific) Pte Ltd
|
Singapore
|
Lucas Meyer Cosmetics Asia Pte. Ltd.
|
Singapore
|
International Flavors and Fragrances IFF (South Africa)
|
South Africa
|
International Flavors & Fragrances I.F.F. (España), S.A.
|
Spain
|
IFF Latin American Holdings (España), S.L.
|
Spain
|
IFF Benicarló, S.L.
|
Spain
|
International Flavors & Fragrances I.F.F. (Norden) Aktiebolag
|
Sweden
|
International Flavors & Fragrances I.F.F. (Schweiz) AG
|
Switzerland
|
International Flavours & Fragrances (Thailand) Limited
|
Thailand
|
IFF Aroma Esans Sanayi Ve Ticaret Anonim Şirketi
|
Turkey
|
IFF Turkey Aroma Ve Esans Ürünleri Satiş Ticaret Anonim Şirketi
|
Turkey
|
International Flavors & Fragrances (Middle East) FZ-LLC
|
United Arab Emirates
|
International Flavours & Fragrances (Vietnam) Limited Liability Company
|
Vietnam
|
Bush Boake Allen Zimbabwe (Private) Limited
|
Zimbabwe
|
International Flavors & Fragrances (Zimbabwe) (Private) Ltd.
|
Zimbabwe
|
Aromor Flavors and Fragrances Inc.
|
Delaware
|
Asian Investments, Inc.
|
Delaware
|
Fragrance Ingredients Holdings Inc.
|
Delaware
|
IFF Augusta Holdings LLC
|
Delaware
|
IFF Chemical Holdings Inc.
|
Delaware
|
IFF Delaware Holdings, LLC
|
Delaware
|
International Flavors & Fragrances (Caribe) Inc.
|
Delaware
|
Lucas Meyer Cosmetics USA, Inc.
|
Delaware
|
HHO Trading, Inc.
|
Nevada
|
IFF International Inc.
|
New York
|
van Ameringen-Haebler, Inc.
|
New York
|
Henry H. Ottens Manufacturing Co., Inc.
|
Pennsylvania
|
Bush Boake Allen Inc.
|
Virginia
|
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/s/ PricewaterhouseCoopers LLP
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New York, New York
|
March 1, 2016
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1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Andreas Fibig
|
Name:
|
Andreas Fibig
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Alison A. Cornell
|
Name:
|
Alison A. Cornell
|
Title:
|
Executive Vice President and Chief Financial Officer
|
By:
|
/s/ Andreas Fibig
|
Name:
|
Andreas Fibig
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
By:
|
/s/ Alison A. Cornell
|
Name:
|
Alison A. Cornell
|
Title:
|
Executive Vice President and Chief Financial Officer
|